Contractor Mortgage 1 Year Accounts

Podcast approved by The Openwork Partnership on 06/01/2026.

What happens if my one year accounts show low or fluctuating income? Can I still qualify for a mortgage?

If you’re a self-employed contractor and you submit a tax return at the end of the year, the income on it might look quite low. You will have put costs through the business and lenders use the bottom line figure – the profit the business has made.

That figure might not seem reflective of all your hard work and earnings. But there are different ways lenders can look at a contractor, and you might have higher costs because you’ve just started.

We start with your tax calculation stating your income, but some lenders might instead look at your invoices or your contracts. You might charge a client £60 an hour or £500 a day – and we could potentially use that rather than your final year-end figures.

Maybe your income has been up and down. That’s why lenders like to see it over 12 months or two years, because you might be on various contracts with different rates.

So if your income is low or fluctuates, we can potentially look at previous contracts, invoices, or payslips, depending on what type of contractor you are. Don’t feel disheartened if your costs or outgoings are particularly high in your first year. Just speak to a broker.

What impact does credit history have on mortgage applications for contractors with one year of accounts?

Not everyone is going to have an ideal, perfect credit score and credit history. You might not meet that requirement because you’ve had past challenges or life events.

We’ve helped people who’ve lost their jobs, fallen ill, had separations and many other things that put them in a financially difficult situation. They may have missed payments, fallen behind and ended up in default or with a CCJ, or they may have entered into debt management plans. All of this impacts your credit score.

Ultimately, the more competitive the lender, the cleaner they want your credit history to be. If you’ve had late or missed payments or defaults in the last six years, you probably won’t have access to those competitive lenders. You’ll be looking at slightly higher interest rates, and maybe more flexible lenders.

It depends on the details. Is it just one missed payment three years ago? That’s probably not a huge problem.

If you’ve had issues in the last year, or multiple defaults or CCJs adding up to quite large amounts, this means bigger deposits or higher interest rates. Fees might be higher, and the way they assess your income might change. It does have quite a big impact.

Even before we get you an Agreement in Principle for our clients, we would ask for a copy of your credit report. We review that before we approach a bank or building society.

Are there any government schemes to assist contractors with one year of accounts in getting a mortgage?

There are schemes available, and although not specific to contractors with a year’s accounts, there’s certainly a bit of help there – particularly if you’re buying your first home. There are a few schemes as we’re talking today in December 2025.

The shared ownership scheme is a great way of getting onto the property ladder – particularly in London and Cambridge and higher priced areas. It also works if you’re buying on your own and can’t quite get the borrowing you need.

There are other schemes like the First Home scheme, which gets you a large discount on new build properties. They aren’t available across the whole of the UK, but you can find them in some areas.

As a contractor with a year’s accounts, you would still be eligible for these schemes. Having a conversation as early as possible will help you understand what might work for you.

Are there any alternatives to traditional mortgages that may suit contractors with one year of accounts?

There may well be. If you’ve found the perfect home, but you can’t quite meet the affordability assessment, something like a Joint Borrower Sole Proprietor could help.

This is a non-traditional mortgage that allows someone else to join you on the borrowing, but they’re not named on the deeds. You would be the sole owner of the property – or you could own it as a couple, with an extra person on the mortgage application.

With that structure you can use more income to get the borrowing amount you need. It reassures the lender that there’s a third applicant whose income tips you over the mortgage affordability requirement.

There are pros and cons to this and not every lender offers it. But it’s a good example of a non-traditional mortgage for a contractor with one year’s accounts who’s struggling to reach the mortgage they need.

Can I use additional sources of income, such as rental income or dividends for a contractor mortgage with a year’s accounts?

Most additional income can be used to support a mortgage application. If you receive rental income, the tax return you’ve submitted to HMRC should confirm that income for lenders. The same goes for dividends from shares or investments in a company.

Other income is acceptable as well – such as child maintenance, child benefit or universal credit. We can also use overtime, bonuses and commission, and pension income. We can use any of those to potentially support your application.

Is it possible to make overpayments or pay off a mortgage early as a contractor with one year’s accounts?

Yes, it’s very likely you can make overpayments or pay a mortgage off earlier as a contractor. Overpayments have a big effect on how much interest you pay in the long-term. Even small amounts each month will save you money and pay your mortgage off faster.

Whether you can make overpayments will depend on the mortgage product. The terms and conditions in your mortgage offer should lay out what the overpayment allowance is. If you’re unsure, speak to the broker or adviser who arranged the mortgage, or the lender directly.

Banks don’t allow it on every single product. You could end up being charged early repayment fees if you are overpaying and you’re not allowed to. Just be really clear on that. Most lenders and most products in the current market do allow overpayment, including for contractors with one year’s accounts.

How long does the mortgage application process usually take for contractors with one year of accounts?

It shouldn’t take any longer than any other application. The difference here is in the preparation beforehand – knowing and preparing the documents you’ll need, and understanding how the lender will assess your income.

It’s very helpful to do all that groundwork before you find a property, or before you start to remortgage. That should smooth out the process when you come to submit the application.

Lenders may ask you for slightly more detail than someone who is employed. Ultimately, more documents may be required, but that shouldn’t make it a longer process.

Are there any specific mortgage lenders that specialise in mortgages for contractors with one year of accounts?

If you approach us as a contractor with one year’s accounts, we’ll hold a discovery call to build up a picture of you and your circumstances: your income, your outgoings, your financial position, your credit history. Your nationality, residency status and deposit amount all help us determine if we can find a high street bank or building society to lend to you – and how much.

As a contractor with one year’s accounts, you’re not going to have access to every bank or building society. You’re going to be quite limited. We’re probably going to be looking at specific mortgage lenders that are more flexible for contractors. There are some that love lending to contractors and really understand how you work and how you’re paid.

Those banks give you more chances of approval than others. Generally, they might come with slightly higher interest rates. But we’d always see if we can place you with the high street first.

Is it beneficial to work with a mortgage adviser like yourselves for a mortgage as a contractor with one year of accounts?

Definitely. I had a client last week who was a contractor, and he’d spoken to a few brokers and visited a few banks who all told him he couldn’t get a mortgage as he’d only been contracting for around six months.

He was recommended to us by another client, and because he’d been in his industry for many years, I found some banks that were happy with his short contracting history.

You may have been doing the job for years, and just changed the way you’re paid or how you invoice. Lenders can take a view on that – it’s just knowing which banks to talk to.

You have a considerably higher chance of approval with a mortgage broker that understands contracting. If you walk down the high street, many banks need two years’ self-employed history. But there are so many different ways we can present you. If you’ve got lots of invoices and you’re earning a really good income, there should be something we can do.

The amount you can borrow will vary widely too. A high street bank might offer you £100,000, yet we can get you £300,000. It really can vary that much. We add an enormous amount of value to contractors, because this is such a complex area.

That’s where we can help. We’ve been advising for a long time and have seen lots of different clients. The advisers within our team have lots of experience of helping contractors and people with a limited track record in self-employment.

We’re always happy to have a chat, answer your questions and help you decide whether to buy right now, or wait until you’ve got a longer contracting history.

Key Takeaways:

• Lenders often look beyond the low profit figure on a contractor’s one-year tax return, using alternative methods like assessing income based on invoices, contracts, or payslips.
• A non-ideal credit history, including late payments or defaults, will restrict access to lenders, meaning you may need to use lenders who have higher interest rates or require a bigger deposit.
• A Joint Borrower Sole Proprietor mortgage can help meet affordability requirements by allowing a third party’s income to be considered for the borrowing amount without them being named on the property deeds.
• Most additional income sources – including rental income, dividends, child maintenance, child benefit, universal credit, overtime, bonuses, commission, and pension income – can be used to support your mortgage application.
• Working with a mortgage adviser who understands contracting is highly beneficial, as they know which lenders to approach.
  
  

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 06/01/2026.