Self-Employed Mortgages: Averaged Income, Multiples and Monthly Payments
Self-employed borrowing starts from a different income figure than salaried borrowing. Understanding the average and the multiple explains most of the result.
What is the Self-Employed Mortgage Calculator?
Lenders assess self-employed income differently from salaried income, so this calculator uses an average annual income times an income multiple you can adjust (4.5x is a common starting point), plus any other regular annual income. Many lenders average the last two years of accounts or tax returns, so use a realistic average rather than your best year. For sole traders, lenders usually look at net profit from tax returns; for limited company directors, they may use salary plus dividends, or retained profit in some cases. Adding your deposit to the maximum borrowing gives the maximum property price, and the monthly repayment uses the standard capital-and-interest formula at your rate and term. This is an estimate only, not financial advice: affordability checks, credit history, outgoings and the lender's own criteria all affect the final decision.
How to use it
- Enter your average annual income — many lenders average the last two years, so use a realistic average rather than your best year.
- Add any other regular income, your deposit, the interest rate and the term.
- Choose an income multiple (4.5x is a common starting point).
- Click Calculate Borrowing to see the maximum borrowing, the maximum property price and the monthly payment.
Worked example
£45,000 of average annual income at 4.5x gives maximum borrowing of £202,500. With a £40,000 deposit, the maximum property price is £242,500, and the repayment payment at 4.75% over 30 years is about £1,056.34 per month (the source rounds this to about £1,057).
How much could someone on £45,000 average income borrow at 4.5x?
Maximum borrowing is £45,000 times 4.5, which is £202,500. With a £40,000 deposit the maximum property price is £242,500, and the monthly repayment at 4.75% over 30 years is about £1,056.34. Two to three years of accounts is typical, and the average is often used rather than the most recent year alone.
Frequently asked questions
How do mortgage companies calculate self-employed income?
It depends on your business structure. For sole traders, lenders usually look at net profit from tax returns; for limited company directors, they may use salary plus dividends, or retained profit in some cases.
How many years of accounts do I need?
Two to three years is typical, although some lenders will consider one year with a strong explanation. The average is often used rather than the most recent year alone.
Does this calculator guarantee I can borrow this amount?
No. It is an estimate only. Affordability checks, credit history, outgoings and the lender's own criteria all affect the final decision.