Self-Employed Expats: How to Get a UK Mortgage

If you are self-employed and living abroad, a UK lender will usually want two to three years of accounts and a clear picture of how your income is calculated. This guide explains how that works for expats, who often cannot provide the UK tax documents a UK-based borrower would. It builds on our page on expat mortgages.

This guide is general information, not personal advice or a mortgage recommendation. Lender criteria vary and change often, so check the current position before you rely on any point here.

The short answer

• Self-employed expats can get UK mortgages, but lenders look for more evidence than they do for an employee.
• Most lenders want two to three years of accounts, though some accept less if the rest of your application is strong.
• Lenders differ widely in how they calculate self-employed income, so the same accounts can produce very different offers.
• If you do not file UK self-assessment, you will need other evidence, such as accounts certified by a qualified accountant and tax returns from the country you live in.

How lenders assess self-employed income

An employee’s income is easy to check from a contract and payslips. A self-employed person’s income can change from year to year, so lenders work it out from your accounts over several years. They look at the level of your profit, whether it is rising or falling and how consistent it is.

Many lenders take an average of your net profit over the last two years. Some use the lower of the two years to be cautious, and others focus on the most recent year if it is higher and the trend is steady. Because the method differs, it helps to see which lenders suit your own pattern of income before you apply.

The evidence you will need

A UK-based self-employed borrower usually proves their income with self-assessment tax calculations and tax year overviews. If you live abroad you often do not file in the UK, so lenders ask for equivalent evidence.

• Two to three years of accounts, ideally prepared and certified by a qualified accountant.
• Tax returns or tax assessments from the country where you live and file, with translations if needed.
• Business bank statements, usually the last three to six months, plus personal statements showing your drawings or salary.
• An accountant’s reference confirming your income and that the business is established.
• Proof of business registration, and a business plan or contracts if you are newer.
• Your deposit evidence and ID, as for any expat application. Our UK expat mortgage options page lists these.

Documents from overseas may need translating or certifying, which adds time, so start collecting them early.

Contractors and day rates

If you work as a contractor, some lenders assess your income from your current contract rather than from past accounts. They may take your day rate, multiply it by the number of working days they allow in a year and use that as your income. This can help a contractor who has not yet built up two or three years of accounts, but it needs evidence of the contract, any renewals and your history of work. If you are paid in a foreign currency, expect a discount on that income. Our guide to a UK mortgage on foreign-currency income explains how.

Company directors

If you own a limited company, lenders may count your salary plus dividends, or your share of the company’s net profit, or both. Some lenders also look at retained profit left in the company. Each treats it differently, so the figure they use can vary a lot. Expect to provide company accounts and, in some cases, your accountant’s confirmation of the split between salary and dividends.

A worked example

This example uses invented figures and is not a quote. Your accounts show net profit of £60,000 in the earlier year and £80,000 in the latest year. A lender that averages the two counts £70,000. One that takes the lower year counts £60,000. One that uses the latest year, because the trend is rising and steady, might count £80,000.

At four and a half times income, those three methods give borrowing of £315,000, £270,000 and £360,000. The same accounts produce a gap of £90,000 between the lowest and highest, which is why it pays to know how each lender calculates income before you apply.

What your accountant can do to help

• Prepare certified accounts and an accountant’s reference in the format the lender asks for.
• Write a short summary of the business, its clients and its outlook.
• Explain any one-off dip in profit, so it is not read as a trend.
• Confirm the split between salary and dividends if you run a company.

If you have less than two years of accounts

Some specialist lenders will consider a shorter history, particularly if you have a strong track record in the same field, a sizeable deposit and a clean credit record. It narrows your choice and may cost more, so a broker who knows which lenders do this can save time. If it is close, waiting until you have a second full year of accounts can open up more lenders.

How to improve your chances

• Keep your accounts up to date and use a qualified accountant.
• Avoid large swings in profit in the year or two before you apply, where you can.
• Keep personal and business finances clear and separate.
• Keep a UK bank account and credit record alive while you are abroad.
• Choose lenders that suit your pattern of income, not the first one that says yes.

Common mistakes

• Assuming UK tax documents are required, or the reverse, without checking what the lender accepts.
• Applying with a single year of accounts when a second year would widen your options.
• Showing low profit because of tax planning, then expecting a high income multiple.
• Mixing personal and business transactions in the same account.
• Leaving accountant certification and translations to the last minute.

Related reading

If you plan to let the property, see our guide to an expat buy-to-let mortgage and our explanation of stamp duty for non-UK residents. For the wider picture, see our financing guide for expats and our overview of UK expat financing options. If you need to raise money against property you already own, see our page on a secured loan against UK property.

Frequently asked questions

Can a self-employed expat get a UK mortgage?

Yes, but lenders want more evidence than for an employee, usually two to three years of accounts, and the choice of lenders is narrower.

How many years of accounts do I need?

Most lenders ask for two to three years. Some accept less in strong cases, which can narrow your options and may cost more.

What if I do not file UK tax returns?

Lenders will usually accept accounts certified by a qualified accountant and tax returns from the country where you live, instead of UK documents.

How do lenders work out a contractor’s income?

Some use accounts. Others use the current contract’s day rate multiplied by a set number of working days, with evidence of the contract and your work history.

How is a company director’s income counted?

Lenders may count salary plus dividends, or a share of net profit, and some also consider retained profit. Each lender treats it differently.

Does foreign-currency income make it harder?

It can. Lenders usually discount foreign-currency income to allow for exchange rate risk, which reduces what you can borrow.

This article is for information only and is not financial advice or a mortgage recommendation. Lender criteria change. Take regulated advice before you borrow, and remember that your home may be repossessed if you do not keep up repayments on a mortgage.