As a self-employed business owner, sole trader, or entrepreneur, remortgaging can be a key part of your overall financial strategy. Whether you want to remortgage because your current fixed-rate mortgage period is coming to an end, or because you wish to release equity from your property for an investment opportunity, you can often secure a lower interest rate and adjust your mortgage term, all of which has the potential to transform your financial position.

With this said, mortgage lenders often apply scrutiny to those who want to remortgage. If you're self-employed and want to switch to a new lender, you will need a good credit score and evidence that you can meet the monthly repayments. Those without a traditional salary can struggle during the remortgage process, even when staying with the same lender. Thankfully, the mortgage market remains accessible to those who prepare their financial records correctly, and the residential remortgaging team at JMW can help you to overcome the unique challenges faced by self-employed people.

Here, our experts outline the challenges that self-employed applicants can face when remortgaging, including the ways you can potentially save money

Can You Remortgage if You Are Self-Employed?

Generally speaking, you can still remortgage your home while self-employed. You can typically choose between two options: a product transfer with your existing lender or a full remortgage with a new provider.

A product transfer is often faster, but your current lender is unlikely to offer the same, competitive rates available in the wider market. On the other hand, switching to a new lender requires a full application, property valuation, and legal checks, which can be more challenging for those who are self-employed. Mortgage lenders do not exclude applicants based on employment status, but they apply specific assessment criteria to account for different income structures.

The objective when remortgaging is to demonstrate that you can meet mortgage payments throughout the term. While self-employed individuals may have fluctuating incomes or retain profits within a limited company, presenting a clear, documented history of earnings can often enable you to access the same competitive remortgage deals as those in PAYE employment.

Challenges for Those Who Are Considered Self-Employed

In the mortgage market, you are generally considered self-employed if you own more than 20 per cent of a business from which you derive your primary income. Mortgage lenders view this as higher risk than lending to someone with a reliable salary, especially if you are newly self-employed and cannot show a year's worth of accounts that demonstrate your repayment capacity. As such, this can result in several key challenges for self-employed remortgage applicants.

Proving that you can make repayments

Lenders seek a predictable income stream to assess risk. For self-employed individuals, income can fluctuate, and profit reported for tax purposes does not always reflect the total disposable income available for repayments. As such, many lenders may need to see a very detailed mortgage application with a wealth of evidence to feel confident in lending to you, especially if you are newly self-employed.

Most lenders require a consistent track record of earnings, typically evidenced by two years of accounts. Lenders will also perform "stress tests" to calculate whether monthly repayments would remain affordable if interest rates rise. This may affect the types of deals you can access, but it will not necessarily prevent you from remortgaging altogether if your credit report is healthy.

Alternatively, you can work with a mortgage broker to find deals that meet your specific circumstances. Specialist brokers can identify lenders whose risk appetites align with your specific financial situation, to give you a better chance of a successful application.

Remortgaging when you are newly self-employed

The duration of your trading history influences lender confidence. Most lenders prefer two to three years of certified accounts to confirm long-term financial stability before they will lend to someone, and if you have just become self-employed it will not be possible to provide this.

However, some niche lenders and even major providers consider applications from individuals with only one year of trading history, provided the financial records show a clear upward trajectory. If you have traded for less than a year, lenders may require signed contracts for future work or evidence of a substantial track record in the same industry prior to becoming self-employed.

Providing accurate documentation with your mortgage application

Providing robust proof of income is a mandatory requirement. Lenders require official documentation verified by HM Revenue and Customs or a qualified accountant. To satisfy lender requirements, you must provide:

• Tax returns (SA302 forms): These documents confirm total income received and tax paid for specific tax years.
• Certified accounts: Prepared by a chartered accountant, these provide a detailed breakdown of turnover, expenses, and net profit.
• Bank statements: Lenders use personal and business bank statements from the last three to six months to verify cash flow.
• Evidence of future work: Signed contracts for upcoming projects reassure lenders of ongoing income stability.

Holding some of this information is a legal requirement for those who are self-employed, and this means that applicants should have the information to hand. However, someone who has newly gone into business for themselves or entrusted their business accounts to someone else may need to take extra steps to gather the information they need.

Proving a stable income based on business structure

Lenders evaluate income differently based on how a business is structured. For example, for sole traders, lenders generally assess the net profit of the business using SA302 forms. This is the most straightforward structure to evaluate, though personal and business finances are closely linked.

For company directors, mortgage providers will consider the salary and dividends drawn. However, some flexible lenders also consider a director’s share of retained profits, which can increase borrowing capacity. In a partnership, the lender will review the individual’s share of business profits. Several years of accounts are required to verify that the share of income is stable and sufficient for mortgage repayments.

As such, the requirements in each case are different. JMW's experienced solicitors can represent you from the outset of the remortgaging process and advise you on the financial implications of your business structure, thanks to our experience in this area.

Early repayment charges

If you are still within the fixed rate period of an existing mortgage product, you may need to pay an early repayment charge to switch to a new one. This is usually calculated as a percentage of your property's value, and it can be significant. In fact, in some cases, it can outweigh the benefits of remortgaging by representing a bigger outlay than the savings your new deal would offer. Speak to a mortgage adviser about your options if you are concerned about the financial viability of a remortgage.

Proactive Strategies for a Successful Remortgage

Preparation can make the application process more straightforward and allow self-employed borrowers to access the best market rates. Working with an experienced mortgage adviser and a solicitor during the process can also deliver the support you need to make the most from your new mortgage product.

This is key, because mortgage brokers provide access to "broker-only" deals and package your application to meet specific lender criteria, which increases the likelihood of approval. Some brokers specialise in applications for the self-employed, and this can enable you to pursue the best lenders for your needs.

Make sure your tax returns are up to date and have at least two years of accounts ready. If income varies between years, prepare a clear explanation for the lender, as they prefer steady or increasing profit trends.

Finally, you should check your credit history early, as a high credit score indicates a reliable borrower. Review your credit file at least six months before remortgaging to resolve any errors, take the opportunity to improve your credit record if necessary. Most mortgage offers last for up to six months, so this is a good time to start the process, especially if you are looking for a new fixed rate mortgage before you move to your current lender's standard variable rate.