Can I Get a Mortgage with One Years Accounts ?

A common question we are asked, is can I get a mortgage with one years accounts ? The answer, is yes you can! It is a common miss-perception that in order to obtain a mortgage, you need three years accounts.

It is true that the longer you have been trading, the more options you may have, the better the rate maybe, but there are mortgage lenders who are happy to consider mortgages based on your first set of accounts.

This is for Sole Traders, Partnerships and Limited Company Owners.

Your journey broken down

You need a profit

It may seem obvious that to borrow money for a mortgage, your business needs to have made a profit. When obtaining a mortgage with one years accounts, its more important than ever. To obtain a mortgage based on ones years accounts, you must have made a clear profit.

  • Sole trader & LLP – Affordability based on “net profit”
  • Limited Company – Net profit plus salary or Dividend plus salary

The business must be sustainable

The next criteria that the lender wants to be confident of, is that the business is sistainable. So what does that mean ?

What it means is that the lender wants to be sure that you have not been reliant on one big deal or one big contract which provided you with a good net profit in year one. The lender wants to know that your business levels are going to stay the same or grow moving into year two.

If your business is in a sector which is known to do well or we can prove that the business sources are spread out, it will improve the chances dramatically of a succesful outcome.

Sole Trader

The process is fairly simple.

Net profit will be used to calculate your loan amount. You will need to deposit a 5% deposit, and have a business which is sustainable. An accountants reference may also be requested on top of this for added security and indication the business is growing.

Documents needed

  • SA302
  • Tax year overview
  • Accountants reference (If applicable)

Limited Company Owners

As a limited company owners, the process is a little more complex, given the nature of the set up.

You will most likely be employed by the company as a PAYE and possibly pay yourself a dividend.

The lender will assess your income based on eitehr net profit or divends plus your salary. What is critical is that you have a qualified accountant with signed accounts, who can give an accurate overview of your business.

Documents needed:

  • SA302
  • Tax year overview
  • Signed accountant from a qualified accountant