Self-Employed Mortgages in the UK. How Lenders Really Look at Your Income in 2026

Liam Drummond
4 days ago
5 min read

Woman in a red dress sips coffee while typing on a laptop in a café. Plants, a lantern, and a notebook are on the wooden table by the window.

Getting a mortgage when you are self-employed often feels more complicated than it should be. Based on everything we are seeing in the market right now, 2026 is shaping up to be a far better year for self-employed applicants. Lenders have already begun modernising their criteria, and we expect this trend to continue as we move into the new year.

One of the most significant shifts we predict for 2026 is how lenders assess income for limited company directors. Many lenders have already begun moving away from the traditional salary-and-dividends approach, favouring salary and net profit instead. This trend looks set to grow because it gives a more accurate picture of how a business is performing. It also supports directors who run their companies responsibly and retain profits within the business for stability and tax efficiency.

If you are a company director who takes a small salary and modest dividends, this is very important. It means your real borrowing potential can finally reflect the strength of your business rather than the amount you withdraw.

What We Expect Self-Employed Mortgage Criteria to Look Like Going Into 2026

Lenders are becoming far more comfortable with different trading histories, fluctuating income and modern business structures. We already see:

• More lenders accepting one year of accounts

• Greater reliance on net profit for affordability

• More flexibility for contractors

• Better understanding of retained profits• Stronger focus on business bank statements

All signs suggest this will continue into 2026. Lenders are competing harder for business, and self-employed applicants represent a large and growing part of the market.

Why Salary and Net Profit Are Likely to Become Even More Important in 2026

Here is a real scenario many business owners will recognise.

You pay yourself a salary of £12,000 with dividends of £20,000. On paper, that gives you a personal income of £32,000. A traditional lender using salary and dividends only would base your borrowing capacity on that figure.

Now imagine your company generated £100,000 in net profit. Lenders using salary and net profit already treat your income as £112,000. As more lenders move in this direction going into 2026, directors who reinvest profit and run tax-efficient businesses will finally be assessed fairly.

This trend is one of the biggest opportunities for self-employed borrowers in the coming year.

Most Asked Self-Employed Mortgage Questions Going Into 2026

Here are straightforward answers based on current criteria and expected lender behaviour in the new year.

Do I still need two years of accounts going into 2026

Most lenders prefer two years, but more and more accept one year, especially if the business is profitable or you have industry experience. This trend is expected to continue.

Is it getting easier for self-employed borrowers in 2026

Yes. Lenders are becoming more familiar with modern business structures. The main challenge is showing clear evidence of income rather than having a payslip.

Will lenders still average my income?

Some will, but more lenders now use the most recent year if it is higher. That is expected to continue in 2026 as affordability policies become more flexible.

Do I need an accountant in 2026

It is not mandatory, but lenders strongly prefer accounts prepared by a qualified accountant. It speeds up the process and reduces the chance of queries.

Can I get a mortgage with only one year of trading data

Yes. More lenders are entering this space. Contractors and high-earning professionals often find this particularly easy.

What income will lenders use for directors in 2026

We are predicting three main approaches will dominate next year:

Salary and dividends

A more conservative approach is still used by some high street banks.

Salary and net profit

Becoming the preferred approach for many lenders, it is expected to grow in 2026.

Retained profit options

Some specialist lenders may start widening how they count retained profit as the market becomes more competitive.

What if I had a lower year of income

Lenders will continue to look at the reason. If it were a one-off situation or if the business has clearly recovered, the 2026 criteria are expected to treat this more sympathetically.

I take a small salary. Will this still be a problem

No. In fact, as more lenders adopt salary and net profit assessments, this becomes a major advantage.

Why Speaking to a Broker Matters Even More Going Into 2026

With lender criteria changing so quickly, it is becoming harder for self-employed borrowers to know which bank is the right fit. One lender may decline your application because they only assess salary and dividends. Another lender may approve you easily because they assess your salary and net profit, or consider your retained profit.

As we move into 2026, this gap between lenders is expected to become even bigger.

At Drummonds Finance Group, we work with self-employed clients across the UK, including sole traders, limited company directors, contractors, freelancers and people with complex income. We understand how lenders are behaving now and how the market is likely to shift in the coming year. We match your accounts and business structure to the lender who will offer the strongest possible result.

Contact us

What Counts as Self-Employed for Mortgage Purposes Going Into 2026

Many people do not realise they are classed as self-employed for mortgage purposes. Going into 2026, lenders follow the same definitions but are expected to apply them with more clarity and flexibility.

You are considered self-employed if:

• You own more than 25 percent of a limited company

• You operate as a sole trader

• You are a partner in a partnership

• You work on a freelance or contract basis

• You invoice clients instead of receiving a traditional payslip

• You have a mix of PAYE and self-employed income

A lot of people who think lenders will view them negatively are actually treated favourably because their income is more stable than they realise. For example, many long-term contractors with ongoing renewals often have stronger affordability than someone employed on a basic salary.

How Affordability Calculations Are Expected to Evolve in 2026

Affordability rules change with the market. Based on current lender patterns, we expect:

More lenders are using business bank statements to understand real trading levels
Higher multiples for people with consistent profit growth
More lenders are allowing accountants to provide projected figures
Greater flexibility for industries that have seasonal income
More interest in how the business is performing today, rather than just historic tax returns

This creates opportunities for applicants who have grown quickly in the last twelve months and feel that their older tax years do not reflect their true income.

What Paperwork You Should Have Ready as We Enter 2026

Having the right documents prepared makes the application far smoother. These are the ones lenders most commonly ask for, and we expect this to stay the same in 2026.

Latest SA302 and tax year overview
Latest two tax returns, if available
Company accounts for the last one or two years
Business bank statements
Personal bank statements
Accountant reference
Signed contracts for contractors
Proof of deposit

Lenders are expected to rely more heavily on bank statements because they give a real-time snapshot of how the business is actually performing, instead of waiting for year-end numbers.