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If you work for yourself, you'll know that your income doesn't always fit neatly into a standard mortgage calculator. Lenders look at self-employed income differently, depending on how your business is set up and how long you've been trading.
That's why we've created a calculator just for self-employed people. Whether you're a sole trader, partner, company director or contractor, it can give you a clearer idea of how much you might be able to borrow.
Why use a self-employed mortgage calculator?
A standard mortgage calculator usually just multiplies your salary by a set amount. But if you're self-employed, lenders will look at things like your profits, your share of a business, or the salary and dividends you take from your company. They'll also usually work out an average of your income over the last few years.
Our calculator takes all of this into account, with a tailored calculation for each of the main ways of working for yourself. This means you'll get a more realistic estimate of what lenders might offer you.
How to use our calculator
Start by choosing how you work, then enter a few details about your income.
Sole traders
Choose how long you've been trading (one year, two years, or three years or more), then enter your net profit for each year. You'll find this on your tax calculations or accounts.
Partnerships
Choose how long you've been trading, enter the partnership's profits for each year, and add your share of the partnership as a percentage.
Company directors
Choose how long you've been trading and how you'd like your income to be assessed:
- Salary and dividends, which is the income you've taken from your company each year
- Retained profits, which looks at the company's profits and your shareholding. This can be useful if you've kept money in the business rather than paying it out to yourself
Contractors
Enter your day rate and the number of days you usually work each week. The calculator will turn this into a yearly figure, in a similar way to how many lenders assess contractors.
What your results mean
Once you've entered your details, our calculator works out your average yearly income over the period you've chosen. It then shows you how much you might be able to borrow at three different income multiples:
- 4.5 times your income, which is what most high street lenders typically offer
- 5 times your income, which some lenders offer, often to people with stronger applications
- 6 times your income, which a small number of specialist lenders may offer, usually to people with higher incomes, larger deposits or certain professions
If your income has gone down from one year to the next, the calculator will let you know. Some lenders may use your lower figure, or ask for an explanation, so it's worth speaking to an adviser if this applies to you.
Calculations all done? Now get the advice you need...
Example calculations
Here are some examples to show how much you might be able to borrow, based on the standard 4.5 times income multiple. These are for illustration only.
Sole trader
Net profit (per year) | Potential borrowing at 4.5 times income |
|---|---|
£30,000 | £135,000 |
£45,000 | £202,500 |
£60,000 | £270,000 |
£75,000 | £337,500 |
Partner
Your share of profits (per year) | Potential borrowing at 4.5 times income |
|---|---|
£40,000 | £180,000 |
£55,000 | £247,500 |
£70,000 | £315,000 |
£85,000 | £382,500 |
Company director
Salary plus dividends (per year) | Potential borrowing at 4.5 times income |
|---|---|
£50,000 | £225,000 |
£75,000 | £337,500 |
£100,000 | £450,000 |
£125,000 | £562,500 |
Contractor
These examples assume you work five days a week for 48 weeks of the year.
Day rate | Yearly income | Potential borrowing at 4.5 times income |
|---|---|---|
£350 | £84,000 | £378,000 |
£500 | £120,000 | £540,000 |
£650 | £156,000 | £702,000 |
£800 | £192,000 | £864,000 |
How accurate is the calculator?
Our calculator is a great starting point, but it can only give you an estimate. When you apply for a mortgage, lenders will look at your full circumstances, including:
- Your credit history
- The size of your deposit
- Your regular outgoings, such as loans, credit cards and childcare
- Whether your income is stable, rising or falling
- Their own criteria, which can vary a lot from lender to lender
This means the amount you're offered could be higher or lower than your results. For a more accurate picture, it's well worth speaking to an adviser who understands self-employed income.
Tips to boost how much you could borrow
- Keep your accounts up to date. Lenders will usually want to see your most recent figures, so try to file your tax return promptly.
- Think about how you pay yourself. If you're a company director, some lenders will look at your share of the company's profits, rather than just your salary and dividends. This could help you borrow more.
- Reduce your outgoings. Paying down loans or credit cards before you apply could increase how much lenders will offer.
- Check your credit reports for any mistakes, and register on the electoral roll - you can set up a free, cancel-anytime trial on Checkmyfile to do this
- Save a bigger deposit, if you can, as this can give you access to more lenders and better rates.
- Speak to a specialist adviser, who can point you towards the lenders most likely to give you the best result.
Why choose Echo Finance?
At Echo Finance, our friendly advisers understand self-employed income inside out. We'll take the time to understand how your business works and find lenders who'll see your income in the best light.
Here's why self-employed customers choose us:
- We compare deals from across the market to find the right one for you
- Our advisers understand complex income, whether you're a sole trader, partner, director or contractor
- We can access exclusive deals you might not find on your own
- We're 5-star rated on leading review websites
Ready to find out exactly what you could borrow? Get started here for a free, no-obligation chat with one of our self-employed mortgage specialists.
FAQs
Most lenders like to see at least two years of accounts or tax calculations, and some prefer three. However, some lenders will consider you with just one year's figures. Our calculator lets you choose how long you've been trading, and works out your average income over that time.
Find your local adviser
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We are committed to providing advice through the channels that best suit your needs. Our brokers can provide advice via phone, email, video and web chat from anywhere in the UK, but we also aim to offer face-to-face appointments for those who request them.