Can I get a holiday let mortgage if I’m self-employed?

Owning and running your own business has many financial benefits. If you’re fortunate enough to be generating a lot of income from being self-employed, then investing in a holiday property can be an attractive proposition.

However, you may be wondering if being self-employed means it will be harder to access the same range of holiday let mortgages as those in full-time employment.

Thankfully, the answer is a resounding ‘no!’.

Just because you don’t have an employer to confirm and verify your income, it doesn’t automatically mean you can’t get a holiday let mortgage.

In fact, many holiday let mortgage lenders will lend to the self-employed. However, those that require a minimum income level will still have their own criteria for checking your income.

The key lies in knowing what they will look out for and how you can provide the evidence they need to ensure your application is a success. Here, we look at how you can get a holiday let mortgage if you’re self-employed.

What is a self-employed holiday let mortgage?

If you’re a limited company director or partner, a sole trader, freelancer or contractor and get more than 25% of your main income from your own business, most lenders will consider you self-employed.

While it’s not usually a problem when applying for a mortgage of any type, it does mean you’ll need to provide evidence to demonstrate your ability to afford and repay a holiday let mortgage on top of any other financial commitments you may have.

So, self-employed holiday let mortgages aren’t really a thing.

If you’re self-employed, you’ll still have access to the same range of mortgage products as those in permanent employment. However, the lenders will apply a different set of criteria to those who work for themselves.

In most cases, lenders will want to know how much income you are taking from your business.

For limited company directors or shareholders, they will look at the salary and dividends you have taken over the past two or three years. And maybe take gross/net profit into account. If you’re a partner, they will consider your ‘share of net profit’. And for sole traders, freelancers or contractors, they will look at your net profits.

You’ll need to provide documented evidence of your earnings in all these cases.

Up until 2014, you could have taken out what was known as a self-certification mortgage, where you simply certified your income to your lender yourself without having to provide any documentation or evidence. However, this type of mortgage was outlawed due to concerns that borrowers were taking on mortgages that they couldn’t afford to repay.

Now, if you’re classed as self-employed and applying for a mortgage, you’ll need to provide your lender with at least two years’ of SA302 tax calculations from HMRC, proof of income and expenditure documents such as bank statements or your bookkeeping records, and evidence of deposit – your bank statement will likely suffice for this also.

It’s important to remember that different lenders have different rules, so working with an expert mortgage broker will ensure you get the right advice to help you get ready before submitting your application.

How do self-employed holiday let mortgages work?

Holiday let mortgages for the self-employed work in exactly the same way as they would for those in employment. The application process is largely the same, and you’ll still have access to the same choice of products, the only difference being that you’ll need to prove your income differently.

The main things lenders will assess are how suitable the property is for mortgage security, its income-generating potential, and your financial circumstances and personal income.

The latter is a key one because the main thing lenders are interested in is your ability to pay.

Most lenders will want to be sure you will be able to repay the mortgage on your holiday let property even if it doesn’t generate any bookings or remains empty for long periods.

Can I get a self-employed holiday let mortgage?

If you’re self-employed, whether as a company director, sole trader or freelancer, there’s no reason why you can’t get a holiday let mortgage.

In fact, if your business has sustained growth and you can prove that your income has increased over time, you may even be able to get access to the best interest rates and deals on the market.

It all depends on your personal circumstances, and your ability to demonstrate to the lender that you can afford the repayments and manage your finances sensibly.

The holiday let mortgage market is still quite niche, so if you’re serious about buying a holiday property, getting some professional expert advice is essential.

With the right advice and guidance, securing a holiday let mortgage if you’re self-employed can be relatively straightforward and hassle-free.

Our expert team has over 40 years of experience in the holiday let market and is dedicated to taking the stress away from getting the right mortgage.

We’ll provide honest, straightforward advice and guidance on the right way forward and help you arrange the deal that’s right for you. Get in touch today to find out more.