Self employed mortgage calculator

The figure a lender works from can vary widely for the same person, depending on how you are paid and which lender you use. The calculator above shows the main ways lenders read self employed income, and an illustrative borrowing range for each one.

How lenders work out self employed income

For an employee, a lender reads a payslip. For you, they have to choose a method, and the choice can matter more than the income itself. The three questions that usually decide it are:

1. Which figures do they use? Drawn salary and dividends, your share of the company's profit, or your net profit as a sole trader or partner.
2. Which years do they use? Many average the last two years. Some will use your latest year on its own where income has gone up. If your latest year is lower, most will use the lower figure.
3. How much will they lend on it? Many lenders lend around 4.5 times income, and some go further on higher incomes or for certain professions, always subject to affordability. The calculator uses 4.5 to 5 times as an illustration.

We explain the averaging problem in more depth in your best year yet, averaged away by the lender.

Using it as a limited company director

Enter your salary, your dividends for the last two years and, if you know it, the company's net profit after corporation tax and your shareholding. The calculator then shows three readings: a two year average of salary and dividends, salary plus your latest dividends, and salary plus your share of net profit.

The last of those is often the largest, because it counts profit you have left in the business. Not every lender will use it, and those that do usually look at your shareholding and how long you have held it. Our page on mortgages for limited company directors covers this in detail, and the income tax trap that shrinks your mortgage explains why keeping your drawings low does not always cap your borrowing.

Using it as a partner or LLP member

Enter your share of profit for the last two years. The calculator shows a two year average next to your latest year. For partners in law firms and other professional practices, some lenders will use your latest share of profit confirmed by a letter from the firm. See mortgages for solicitors and partners.

Using it as a contractor

Enter your day rate and the days you work each week. The calculator annualises it over 46 and 48 weeks, two common lender approaches. Lenders that use this method will also look at your contracting history, the length of your current contract and any gaps. Our page on contractor mortgages explains what they usually ask for.

Using it as a sole trader

Enter your net profit for the last two years. The calculator shows a two year average next to your latest year. Some lenders will use your latest year where profit has gone up, and some will consider one year's trading. See self employed mortgages.

Why the result is only a starting point

The calculator deliberately keeps things simple. A real assessment also looks at your outgoings, any loans or credit commitments, your credit history, your deposit, the property, and the income of anyone applying with you. Lenders also change their criteria from time to time.

What the calculator does show is the point that matters most for the self employed: the same accounts can support very different figures depending on how they are read.

What happens next

If the readings vary a lot for you, that is usually a sign the choice of lender matters. Send us a few details and we will look at your accounts the way an underwriter will, then talk you through which lenders are likely to read them fairly.