Self-Employed Mortgages in Scotland: A Complete Guide

★ Key Takeaways

• You'll typically need 2+ years of certified accounts or tax returns, though some lenders accept just 1 year's trading history
• Essential documents include SA302 forms, Tax Year Overviews from HMRC, certified accounts, and 3 months' bank statements
• Contractors have flexible options – lenders may use day rate × 46-48 weeks or traditional accounts method
• Ltd company directors can often include salary, dividends, and sometimes retained profits in income calculations
• Working with a specialist broker gives you access to lenders who truly understand self-employed income structures

Getting a mortgage when you're self-employed in Scotland isn't as difficult as many people fear – but it does require more preparation than a straightforward employed application. Whether you're a sole trader, limited company director, or contractor, lenders want to see evidence that your income is stable and sustainable.

The good news? Scotland's mortgage market has plenty of lenders who specialise in self-employed applicants. With the right documentation and guidance, you can access the same competitive rates as employed borrowers. In this complete guide, I'll explain exactly what you need to know about self-employed mortgages, from the documents required to how lenders assess your income.

Most mainstream lenders require a minimum of two years' trading history with certified accounts or tax returns. This gives them confidence that your business is established and your income is consistent.

However, there are specialist lenders who will consider applications with just one year's accounts – particularly if you have a strong deposit, work in a professional field, or can demonstrate relevant industry experience before going self-employed.

Your SA302 forms (tax calculations from HMRC) must be no older than 18 months at the time of application. This is why timing your mortgage application around your tax return submission is crucial.

The way lenders calculate your income depends entirely on your business structure. Here's how it works for each type of self-employed borrower:

Sole Traders

For sole traders, lenders look at your net profit (income after business expenses but before personal tax). Most lenders will average your net profit over the last 2-3 years. If your income is rising, some lenders will use your latest year's figure alone, which can boost how much you can borrow.

Limited Company Directors

If you're a director of your own limited company, lenders typically use your salary plus dividends. This is straightforward if you take regular dividends, but many directors deliberately minimise their drawings for tax efficiency.

The good news is that some specialist lenders will also consider retained profits – the money left in your company after expenses. This can significantly increase your borrowing potential if you reinvest profits rather than drawing them as income.

Contractors

Contractors often have the most flexibility. Specialist lenders may use a day rate calculation – typically your daily rate multiplied by 46-48 weeks to account for holidays and gaps between contracts. This often produces a higher income figure than traditional accounts-based assessments.

Alternatively, lenders can assess contractors using the traditional accounts method if that produces a better result for your circumstances.

Income Assessment Methods by Business Type

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Preparation is key for self-employed mortgage applications. Having all your documents ready will speed up the process and avoid delays. Here's what you'll need based on your business structure:

Documents Checklist by Applicant Type

Pro tip: You can download SA302 forms and Tax Year Overviews directly from your HMRC online account. These documents should be no more than 18 months old at the point of application – so timing your mortgage around your tax return is important.

While some employed borrowers can access 95% mortgages, self-employed applicants typically need a slightly larger deposit. Most lenders prefer a minimum of 10% deposit for self-employed borrowers, though 95% LTV products are available from some specialist lenders.

A larger deposit – say 15% or 20% – will give you access to more lenders and better interest rates. It also demonstrates financial stability, which can help if your accounts show variable income from year to year.

Maximise your chances of mortgage approval with these practical steps:

• Submit your tax return early – File your 2024/25 tax return as soon as possible after 6th April 2025 to have a valid, recent SA302 for your application.
• Keep personal and business finances separate – Maintain clear records and avoid mixing personal expenses with business accounts.
• Use a qualified accountant – Certified or audited accounts from a recognised accountant carry more weight with lenders than self-prepared figures.
• Maintain a healthy credit score – Pay all bills on time and keep credit utilisation low. Self-employed applicants face extra scrutiny, so a clean credit file is essential.
• Work with a specialist broker – A broker with experience in self-employed mortgages knows which lenders are most favourable and can present your application in the best light.

For self-employed applicants, working with a mortgage broker isn't just helpful – it can make the difference between approval and rejection. Here's why:

• Access to specialist lenders – Many lenders who excel at self-employed cases don't deal directly with the public.
• Knowledge of criteria – Brokers know exactly which lenders will accept 1 year's accounts, use retained profits, or offer day-rate calculations.
• Professional packaging – Presenting your case effectively to underwriters can significantly improve your chances.

Understanding the full buying process becomes much easier with expert guidance, especially when your income structure is more complex than a simple salary.

Can I get a mortgage with only 1 year's accounts?

Yes, some specialist lenders will consider applications with just 12 months' trading history. You'll typically need a larger deposit (15-20%) and may face slightly higher rates. Having previous experience in your industry, a strong credit history, or a professional qualification can help your case.

Do self-employed borrowers pay higher interest rates?

Not necessarily. With a solid trading history, good accounts, and a decent deposit, self-employed borrowers can access the same competitive rates as employed applicants. The key is finding the right lender for your specific circumstances – which is where a broker's expertise becomes invaluable.

What if my income dropped last year?

Fluctuating income is common for self-employed people. Some lenders average your figures, which can help if one year was lower. Others may focus on your lowest year or ask for explanations. Be prepared to provide context – perhaps you took time off, invested in equipment, or your industry had a seasonal dip. A broker can match you with lenders who take a sensible view of variable income.

When should I file my tax return to get the best mortgage timing?

Submit your Self Assessment as soon as possible after the tax year ends (5th April). This gives you fresh SA302 documents valid for 18 months. If you're planning to apply for a mortgage in autumn 2025, for example, having your 2024/25 return filed by summer gives you the most up-to-date figures to present to lenders.

Being self-employed shouldn't hold you back from buying a home in Scotland. With the right preparation, documentation, and guidance, you can secure a competitive mortgage that works for your business structure.

At McGhie Mortgages, I specialise in helping self-employed borrowers across Edinburgh, the Lothians, and all of Scotland. Whether you're a sole trader, limited company director, or contractor, I'll find the lenders who understand your income and offer the best terms for your situation.

Self-employed and ready to buy? Book a free, no-obligation consultation and let's discuss your options.