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How to get a mortgage being a sole trader
We understand that ‘one size does not fit all’, especially for sole traders’ mortgages.
We offer innovative mortgage products designed to provide solutions for sole traders who are often overlooked by their own bank.
Most high street banks will say they require two years’ solid figures before being able to consider your application. What makes this even worse, is they’ll use an average over the last two years often leaving you short of where you’d like to be.
If this sounds familiar, then don’t be discouraged. You’re about to witness the power of having a team of sole trader experts fighting your corner!
Our unique approach involves manually underwriting mortgages with common sense, without relying on credit scoring. This, along with our deep knowledge of the sole trader mortgage market, brings solutions you never thought possible.
If you want to take advantage of the benefits of being a sole trader whilst remaining as tax efficient as possible, then you’ve come to the right place.
Our lenders love sole traders, and with exclusive deals at high street rates, your mortgage dreams can finally become a reality.
How Lenders Calculate Sole Trader Income
Sole traders are assessed on net profit, not turnover. This is the single most important thing to understand about a sole trader application, and it is where most people are surprised by the figure a lender arrives at.
Your net profit is the figure declared on your SA302 tax calculation after allowable expenses. A sole trader turning over £90,000 with £40,000 of expenses is assessed on £50,000, not £90,000. Lenders will also want your tax year overview to confirm the tax has been paid.
Which year they use matters just as much:
- An average of your last two years — the most common approach, and the one that works against you if your most recent year is your strongest.
- Your most recent year alone — used by some lenders where income is rising and the increase can be explained.
- The lower of the two years — used by most lenders where income is falling, on the basis that the lower figure is the safer assumption.
This is why the same set of accounts can produce meaningfully different borrowing figures depending on which lender sees them, and why the choice of lender matters more for sole traders than for employed applicants.
What to Do Before You Apply
If a mortgage is on your horizon, a few things are worth doing early:
- Speak to your accountant about your mortgage plans. Reducing taxable profit saves tax but also reduces what you can borrow, and that trade-off is easier to manage a year ahead than a month before you apply.
- Make sure your tax returns are filed and the tax paid. Lenders want the tax year overview as well as the SA302, and an unpaid balance will hold up an application.
- Keep business and personal banking separate. Mixed accounts make it harder for an underwriter to verify income and slow the process down.
- Avoid taking on new personal credit in the months before applying, as it reduces affordability and adds searches to your file.
If your accounts cover less than two years, our One Year Trading Mortgages page explains which lenders will still consider you.
What Documents Do Sole Traders Need for a Mortgage Application?
Applying for a mortgage as a sole trader often feels more complicated than it should be, but with the right paperwork, the process becomes far smoother. Lenders need to see a clear picture of your income and business activity. The most common documents include:
- SA302s and tax calculations: These are official HMRC documents showing your declared income and tax paid. Most lenders will ask for the last two years, although some will work with just one.
- Latest year’s income evidence: If your most recent trading year was stronger than the one before, it can sometimes be used on its own to improve affordability.
- Business bank statements: These help underwriters understand how your income flows, identify regular payments and check for financial stability.
- Proof of regular contracts (if applicable): If you work on contract or freelance agreements, evidence of upcoming work can reassure lenders that your income is reliable.
Can You Get a Mortgage With One Year of Trading?
Yes, it’s possible, although the options are more limited. Many mainstream lenders still prefer to see two or three years of accounts. However, some specialist providers are willing to consider just one year, provided your figures are strong and well-documented.
New Wave’s in-house underwriting team can present your case in the best light. Instead of relying on a computerised decision, we look at your latest tax return, bank statements and any future contracts to build a more complete picture. This often means we can secure mortgage offers for clients who might otherwise be declined on the high street.
How We Help Sole Traders Borrow More
One of the biggest challenges sole traders face is that lenders don’t always judge income fairly. New Wave works differently:
- Using your most recent year’s profit instead of an average: This can make a big difference if your income has grown year on year.
- Explaining fluctuations in income to underwriters: A dip doesn’t have to count against you if there’s a genuine reason, such as investment back into your business.
- Specialist lender relationships that understand self-employment: We work with lenders who actively want to lend to sole traders, meaning your application is reviewed with more flexibility.
Why Work With Us
Here are just a few ways we’re DIFFERENT from other companies
Specialists
Underwriting
More Money
Success Rate
Sole Trader Success Story
Thanks to our tailored service, sole trader Ben secured his dream property with partner Erin. We expertly positioned their case with the lender, leading to approval. They’ve moved in, and their labradors, Loki, Roghan, and Wallace, are loving their new garden
The new wave method
Here’s the SIX STEPS to GUARANTEE Self-Employed Mortgage SUCCESS
Pro-TIP:
Sole Traders
Our expert Dylan says “Being a sole trader is amazing! We have a number of strategies in our arsenal to ensure we take advantage of your sole trader status. With us, you get rewarded not penalised.
Ask our Experts
It can, and this is the single most common issue sole traders run into. Lenders assess you on declared net profit, so the tax efficiency that saves you money in January can reduce what you are able to borrow. It is worth discussing your mortgage plans with your accountant a year or more before you apply.
Usually yes, though lenders will want to see it drawn into your personal account and will ask where it came from. Some will also want confirmation from your accountant that withdrawing it will not damage the business.
A drop does not rule out an application, but it changes how lenders read your accounts. Most will use the lower of your two most recent years where income is falling, so context matters. A clear explanation, ideally supported by your accountant, makes a real difference.
Most lenders want at least one full trading year with accounts or an SA302 to match. A handful will consider less in specific circumstances, but one completed year is the realistic starting point.
It can. Lenders will look at whether business borrowing is serviced from profits already accounted for, and personal guarantees you have given on business debt may be treated as a personal commitment.
Not always, but it helps. Some lenders specifically require accounts prepared or certified by a qualified accountant, so preparing your own returns narrows the range of lenders available to you.
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