Mortgage for Self-Employed Construction Worker

Podcast approved by The Openwork Partnership on 08/04/2026.

What challenges do self-employed construction workers face when applying for a mortgage?

There are quite a few, but I’ll try to keep it short. If you’re self-employed in construction, the documents required for a mortgage are lengthier than if you’re employed. You’ve got to provide tax returns, business accounts and bank statements. That’s one of the first challenges.

In construction, your income could be seasonal. You could have a lot more work in the summer and less in winter because of the weather, so your income goes up and down. You also need trading history. If you’re self-employed, lenders won’t just look at the last three months; they’ll probably look at the last year to three years. With that additional paperwork and irregular income, it can be a bit messy.

What documents are required for a mortgage if I’m self-employed in construction?

When you’re self-employed, the main documents for a mortgage lender are your tax returns. We need a document known as an SA302, which is a form you or your accountant submits to HMRC to show the income you’ve earned over the last tax year.

Sometimes lenders ask for business accounts, depending on the type of company you have. They might request limited company accounts to see your income and outgoings.

Then we need bank statements to show you’re still earning an income and the revenue is still okay, particularly over the last three months. Those also verify your expenditure.

One thing to note is that if you’re in construction, you might be on the CIS scheme. We have a different podcast on this. On the CIS scheme, if you’re paid via invoices or payslips, sometimes we can use those. We would need three months to a year of those invoices.

How many years of accounts or tax returns do I need? Can I get a mortgage if I’ve been self-employed for less than a year?

Typically, most banks like to see two years of accounts or tax returns. A few banks would consider one year’s accounts or tax returns.

If you’re halfway through the year or more, some banks might lend to you if we can get a projection from your accountant to show what you’re likely to earn in the future. In that case, they might be comfortable with lending based on less than a year’s figures – but not many do that.

Alternatively, if you’re paid via invoices and payslips and you pay tax on those as opposed to paying tax at the end of every year, we could look at using those invoices and payslips. If that’s the case, we might be able to do it based on less than a year.

Do I need to be registered as a sole trader or a limited company? Is it easier to get a mortgage as a limited company director or sole trader?

How your business is registered will be led by your earnings, your income, what you’re expected to earn and what’s more tax-efficient.

An accountant is definitely better suited to advise you on how to be registered. Usually, it’s better to be a limited company if you have a certain turnover or if you’re employing multiple people, but you should talk to an accountant about that.

In terms of whether it’s easier to get a mortgage as a limited company or sole trader, both have pros and cons. If you’re a limited company director, there are different ways we can use your income. We can use salary and dividends or retained net profits. More often than not, though, more documentation is required for a limited company than for a sole trader.

Being a sole trader could be seen as easier as there are fewer documents, but we can only use your income in one way – generally, using your net profit. Lenders take an average of the last year or two years’ income.

For a sole trader, it’s a little more straightforward, but there’s less opportunity to increase the borrowing if needed. The challenge is really being self-employed, full stop. Both types of self-employment require similar documents – and probably an expert to help you.

How do lenders calculate income for self-employed construction workers?

I mentioned the two-year history or one-year history – there are different ways to assess your income. As a guideline, most lenders look at an average of your last two years’ income.

To calculate the mortgage amount, they typically multiply that by four to five, although if it were as straightforward as that, we wouldn’t have a job.

It’s complicated – if you’re a limited company director, we can use your salary and dividends or your salary and net profit. Different figures can get us different answers.

This is where we can come in. We help you understand how much you can borrow, because each bank will vary. If you walked down the high street for a mortgage as a self-employed construction worker, you would probably get five very different figures for how much you can borrow.

Can I use retained profits or dividends as income?

You can use either retained profits or dividends. If you also get a salary throughout the year, that’s included too. We would explore whichever works better technically. We have the ability to look at all the figures from different lenders.