5 Top Tips for Buying a House When You’re Self-Employed

Living room in a Victorian Terrace with exposed brick fireplace, log burner and walls in Farrow and Ball Pavilion Grey.

Dream of taking a step onto the property ladder but think it’s out of the question as you work for yourself? I’m chatting through my personal experience and sharing 5 top tips on buying a house when you’re self-employed.

Get Your Finances in Order

Step one is to get your finances in order, you need to know exactly what you’re playing with so if you don’t have an income tracker spreadsheet, make one! It doesn’t have to be fancy, just a simple income and expenses set-up will do.

Knowing exactly what you have coming in every month means that you are able to determine how much you can be saving towards a house deposit. This obviously isn’t always as straight forward when you’re self-employed and your monthly income can fluctuate but I like to sit down at the start of each month, plan out what work I have on and how much I will earn from each client. From here I take away all of my monthly bills and necessary costs which then leaves me with my disposable income. I then put a set amount of spending money onto my Monzo card and the rest into my savings.

I’ve found this approach to really help when it comes to dividing up my money and equally beneficial when it came to saving for a house deposit. Knowing how much you are able to save each month means you are able to get a rough idea of how long you need to save for based on whether you are going for a 5% or 10% deposit and what price of houses you are looking at.

This is also the perfect time to take advantage of any government schemes such as the Help to buy ISA, although this is actually being withdrawn in November of this year so The Nottingham have very kindly provided some information on another government account that offers a bonus, the Lifetime ISA.

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The Nottingham offer a Lifetime ISA where you’ll receive a 25% Government bonus* on your savings up to a maximum bonus of £1,000 per tax year. You can open an account with £10 if you are aged 18-39 and can use the tax-free savings to buy your first home or save for your retirement. If you do buy a first home with your Lifetime ISA you can keep the account open, continue to save for retirement and receive your bonus until you’re 50. You’ll then be able to withdraw your savings at aged 60. The Nottingham offer 1.25% tax-free p.a./AER** interest on top of your savings and Government bonus for the entire time that you hold the account. There is a 25% withdrawal fee for any ineligible withdrawals so, you may get back less than you put in if you withdraw your savings for any other reason. The Nottingham are the only financial service provider who offer a Lifetime ISA in branch and online.

Sharing my experience of buying a house when self-employed

Make an Appointment with a Mortgage Advisor

The biggest breakthrough for us came when we decided to see a mortgage advisor, before this my only experience was enquiring at my own bank about mortgages and swiftly being told that there was no chance of me being approved without three years of tax returns (at this point I only had one years).

We were recommended by family to an independent mortgage advisor who quickly abolished all pre-conceptions I had and assured me that we would have no trouble getting a mortgage in our current situation. I totally appreciate that this won’t be the case for everyone and buying with my boyfriend who is not self-employed had a huge impact on this.

The initial consultation was totally free and we really did gain a lot from the session, we came away feeling a lot more positive and with a rough idea of how much we would be able to borrow which meant we could begin to plan in detail when we could realistically kick-start the whole process.

In the end, once we had found our house we decided it was worth working with the mortgage advisor as we were both first time buyers who weren’t really sure what we were doing and the fact that I am self-employed does bring some level of complication to the whole thing. I honestly cannot recommend going to see a mortgage advisor more, ours made everything so simple and straightforward, was always there to explain the various steps to us and really did make the whole process pretty painless which we both believed was totally priceless!

Don’t Put Off Your Tax Return

I know, I know, tax returns aren’t much fun but if you’re planning on buying a house then it’s beneficial to get yours filed as soon as the 5th April rolls around. That way you know exactly how much you have earned during the last tax year which makes doing your sums SO much easier!

As soon as I had the paperwork from filing my tax return I was able to pass it on to my mortgage advisor who could then use it as evidence when applying for the mortgage. It’s in your interest to get it filed as soon as possible so that the process can start moving so ditch the procrastination and get proactive!

This is also where staying on top of your finances throughout the year really comes in handy so you aren’t left with a daunting amount of work to do come April time. Trust me, your future self will thank you if you spend an hour or so updating your income spreadsheet every week!

Sharing my experience of buying a house when self-employed

Make Sure to Account for Those Hidden Costs

Buying a house is expensive, there’s no doubt about that but it’s not just the actual house that you need to account for. There’s also the solicitor’s costs, building surveys and mortgage advisors (if you choose to have one).

It’s so easy to get caught up in the overall excitement and take the approach that you’ll be able to cover whatever crops up along the way but these costs need to be budgeted in ahead of time so that you don’t get caught out. We had a spreadsheet which detailed all of the additional costs and dates they needed to be paid by which helped us to get a better overall picture of the figures.

Don’t Get Disheartened!

Buying a house can be one of the most stressful times of your life but equally, it should also be an exciting time so try not to let it all get to you too much! It can be ridiculously disheartening if you get outbid or your offer gets rejected but just remember that your dream house is still out there somewhere, you just need to find it!

Have you been through the process of buying a house when self-employed? Are you planning to in the future? I’d love to hear about your experiences!

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Dream of taking a step onto the property ladder? I'm sharing my personal experience and 5 top tips on buying a house when you're self-employed.

Additional information on the Lifetime ISA

* The maximum you can save each tax year is £4,000. The Government will pay a 25% bonus of up to £1,000 each tax year. You can withdraw money from a Lifetime ISA to buy your first home, or at age 60. Other withdrawals will usually mean a 25% Government charge, so you could get back less than you put in. Full terms and conditions are available at thenottingham.com. Nottingham Building Society, Nottingham House, 3 Fulforth Street, Nottingham NG1 3DL 

** We will pay your interest free of UK income tax. Your tax treatment will depend on your individual circumstances and may be subject to change in the future. The tax treatment of ISAs may also change. AER stands for Annual Equivalent Rate. It shows what the interest rate would be if the interest was re-invested in the account each year.

*Rates correct at time of publishing

Photography by Ami Ford.


Author: Jessica

I’m Jess, a twenty-six year old self diagnosed Instagram and brunch addict. Whilst browsing Jess Who expect to find a hint of relatable personal style, Pinterest-worthy interiors, drool-worthy food and all of the latest happenings in Nottingham!