Do You Need Two Years of Accounts to Get a Mortgage?

The honest answer for self-employed borrowers, limited company directors and people with multiple income streams

Your home may be repossessed if you do not keep up repayments on your mortgage.

One of the most common questions self-employed clients ask us is:

“Do I need two years of accounts to get a mortgage?”

The simple answer is: not always.

Many lenders still prefer to see two years of accounts, especially where the income is new, inconsistent or difficult to evidence. However, some lenders may consider applicants with one year’s accounts, provided the overall case is strong and the income makes sense.

This is particularly relevant for people who have moved from employment into self-employment, started a limited company in the same line of work, or added a new income stream that reflects their existing profession or experience.

At WIS Mortgages, we regularly work with self-employed clients, limited company directors, contractors, locum professionals and applicants with more than one source of income.

The key is not just having the documents. The key is understanding the accounts, explaining the income properly and matching the case with the right lender.

At a glance: two years of accounts vs one year’s accounts

This does not mean one year’s accounts will work for everyone. The lender still needs to be comfortable that the income is sustainable, well evidenced and affordable.

Do lenders always need two years of accounts?

No, not always.

Traditionally, many lenders wanted to see two or even three years of accounts before considering a self-employed mortgage application. Over time, lender criteria have evolved. Today, some lenders may look at one year’s accounts where the case is strong enough.

That does not mean every lender will accept it. Most lenders may still ask for two years. But there are lenders who can take a more flexible approach, especially where the applicant can show:

• A clear trading history
• Experience in the same industry
• Stable or increasing income
• Strong bank statements
• A good credit profile
• A sensible deposit
• A realistic property purchase
• Clear evidence that the income is sustainable

This is where broker experience matters. A one-year accounts case usually needs to be packaged carefully and explained clearly to the lender.

Accounts vs tax returns: what do lenders actually mean?

When people say “accounts”, they often mean different things depending on how they trade.

For limited company directors, lenders may ask for company accounts, salary, dividends, business bank statements and sometimes accountant references.

For sole traders, lenders usually do not ask for company accounts because there is no limited company. Instead, they may ask for HMRC documents such as:

• SA302s or Tax Calculations
• Tax Year Overviews
• Business bank statements
• Accountant-prepared figures, where relevant

This distinction is important because a sole trader with one year’s tax return is not assessed in exactly the same way as a limited company director with one year’s company accounts.

The right documents depend on the applicant’s trading structure and the lender’s criteria.

If you are unsure which documents apply to you, our self-employed mortgage guide can help explain the difference.

Why understanding the accounts matters

For self-employed borrowers and limited company directors, the income figure is not always as simple as the number shown on a payslip.

Company accounts can include different types of expenses, retained profits, pension contributions, director salary, dividends and other accounting entries. Some of these may affect how a lender views affordability.

In certain cases, some lenders may consider specific expenses that can potentially be added back when assessing income. For example, pension contributions, certain one-off costs or accounting adjustments may be viewed differently depending on the lender’s criteria.

This does not mean every expense can be added back, and it does not mean every lender will take the same view. But it does show why self-employed mortgage advice often needs someone who understands both mortgages and accounts.

Ifthikar Mohamed is a chartered accountant and has run an accountancy practice for 17 years. This gives him a deeper understanding of company accounts, sole trader income, limited company structures and how different income figures may be interpreted by lenders.

This is not a replacement for tax advice, and mortgage affordability will always depend on lender criteria. However, having someone who understands the accounts can help identify where the income position may be stronger than it first appears.

When can one year’s accounts work?

One year’s accounts may be more acceptable where the applicant’s current self-employed income is a continuation of what they were already doing before.

1. Employed to self-employed in the same trade

An employed plumber who becomes a self-employed plumber may have a stronger case than someone entering a completely new industry.

The lender can see that the person already has experience, skills and a track record in that trade.

2. Professional moving into locum work

A doctor, dentist, pharmacist or other professional moving into locum work may also have a strong case if the work is consistent and supported by evidence.

For example, a doctor who has worked in the medical field for years and then moves into locum work is not starting from scratch. They are continuing in the same professional area, but under a different income structure.

If you work in healthcare, you may also find our doctor mortgage guide helpful.

3. Sole trader to limited company

Sometimes a client has been self-employed for years but recently moved into a limited company structure.

In this situation, lenders may look beyond just the age of the company. They may consider the client’s previous trading history, the nature of the business and whether the new company is simply a continuation of the same work.

You can read more about this in our guide to limited company director mortgages.

4. Contractors with strong industry experience

Some contractors may have a strong case even without two full years of accounts, especially where they have a contract, day rate history or previous employment in the same sector.

This depends on the lender, the industry, the contract structure and the overall affordability position.

For more information, visit our contractor mortgage guide.

How some lenders assess limited company director income

Limited company director income can be assessed in different ways depending on the lender.

Some lenders may look mainly at:

Director salary + dividends

Others may be willing to consider:

Director salary + share of net profit after tax

There are also lender routes where the calculation may be based on:

Director salary + share of net profit before tax

For example:

Total Assessable Income = Director Salary + Share of Net Profit Before Tax

This can make a significant difference, especially where the company is profitable but the director has chosen not to withdraw all profits as dividends.

However, not every lender takes this approach. The right lender will depend on the company accounts, ownership share, retained profit, business performance, deposit, credit profile and overall affordability.

This is why limited company director mortgages often need more than a basic income check. The case needs to be matched with a lender that understands how the income is structured.

Our 3-step process for complex self-employed cases

To make a self-employed mortgage case stronger, we usually focus on three key stages.

1. Document collection

We review the applicant’s income structure and collect the right evidence.

This may include company accounts, SA302s, Tax Year Overviews, business bank statements, contracts, invoices, payslips, rental income evidence and accountant details.

2. Account review and story packaging

We review how the income is structured and explain the background properly.

This is especially important where the applicant has moved from employment to self-employment, changed from sole trader to limited company, started locum work or has more than one income source.

Where relevant, we also look at whether certain figures in the accounts may be treated differently by lenders, such as pension contributions, retained profits or one-off expenses.

3. Lender matching

We then identify lenders whose criteria fit the case.

This is important because one lender may decline a case that another lender may consider, simply because they assess self-employed income differently.

What if you have more than one source of income?

This is becoming much more common.

Many clients today do not have one simple income stream. They may have:

• A limited company
• Self-employed income
• Locum income
• Rental income
• Dividends
• Director salary
• Side business income
• Contract income
• Partnership income

This can make the mortgage process more complex, but it can also create opportunities.

If a lender only looks at one part of the income, the client may not be able to borrow enough. But if the case is structured correctly and the right lender is selected, it may be possible to use multiple income sources to support affordability.

This is especially important in areas such as Reading, where property prices can make affordability more challenging for families looking to move into a larger home.

Case study: Reading clients with multiple income sources

We recently helped a husband and wife based in Reading who wanted to buy a larger family home.

Their income was not straightforward.

They had:

• Income from a husband and wife limited company
• Additional locum doctor income through another limited company
• Rental property income
• A need to borrow enough to purchase a higher-value property in the Reading area

If we had followed a basic route and only looked at two years of accounts from the joint company, the mortgage would not have worked.

However, the wife had a professional background as a doctor and had moved into locum work, which created an additional income stream. Alongside this, the clients also had rental income.

By reviewing the full picture, identifying the right lender and presenting the income clearly, we were able to include multiple income sources and make the mortgage work.

This is a good example of why self-employed and complex income cases should not be assessed too narrowly.

Sometimes the difference is not whether the client can afford the mortgage. The difference is whether the income is understood and presented properly.

If you are buying in Reading or the surrounding area, you can also visit our mortgage broker in Reading page.

Why Reading buyers often need a more detailed affordability approach

Reading and the surrounding areas have a strong professional market, with many buyers working in healthcare, technology, contracting, property, finance and business ownership.

Property prices in Reading can make affordability more difficult, especially for buyers looking to move into a larger home.

In some cases, clients may need lenders who can consider:

• Higher income multiples
• Multiple income streams
• Limited company profits
• Retained profits
• Locum income
• Rental income
• Contract income
• Professional career progression

This does not mean every client can borrow five or six times their income. Borrowing depends on the lender, credit profile, deposit, commitments, family circumstances and overall affordability.

However, where the income is strong and well evidenced, using the right lender can make a significant difference.

You can use our mortgage affordability calculator to get an initial idea of what may be possible, but a full assessment is always recommended for complex income cases.

Why WIS Mortgages understands complex income cases

Self-employed mortgage cases are not always declined because the client cannot afford the mortgage.

Sometimes they are declined because:

• The wrong lender was selected
• The income was not explained properly
• The documents did not match the lender’s requirements
• The application was submitted too early
• The business structure was misunderstood
• The lender only considered part of the income
• The case needed manual underwriting but was treated like a standard case

This is where experience matters.

Ifthikar Mohamed has around 10 years of experience in the mortgage and financial services space. He is also a chartered accountant and has run an accountancy practice for 17 years, giving him a strong understanding of accounts, tax returns, company structures and how business income is presented.

This combination is particularly helpful for clients with complex income, including sole traders, limited company directors, contractors, locum professionals and applicants with multiple income streams.

Over the years, we have seen lender requirements change. Many lenders still prefer two years of accounts, but some are now more open to considering one year’s accounts where the overall case is strong and the income can be properly evidenced.

The key is knowing when a case is strong enough, which lender may consider it and how to package the application properly.

You can learn more about our wider mortgage support on our mortgage advice page.

Can limited company directors get a mortgage with one year’s accounts?

Potentially, yes.

Some limited company directors may be able to get a mortgage with one year’s accounts, but it depends on the lender and the overall strength of the case.

The lender may look at:

• Director salary
• Dividends
• Company profits
• Business bank statements
• Previous trading history
• Accountant-prepared accounts
• Retained profits
• Industry experience
• Whether the company is a continuation of previous work

A company that has only traded for one year may still be considered if the director has strong experience and the income is sustainable.

For example, someone who was employed in the same industry for many years and then started a limited company may be viewed differently from someone who has entered a completely new sector with no track record.

Can locum doctors get a mortgage with one year’s income?

Yes, some lenders may consider locum doctors with one year’s income, particularly where there is a strong professional background and the income can be evidenced.

Doctors, dentists and other medical professionals may have income that does not fit a standard employed payslip model. They may work through a limited company, receive locum income, have NHS and private income, or combine employed and self-employed work.

A lender will usually want to understand whether the income is regular, sustainable and likely to continue.

This is why the supporting documents matter. Locum income may need to be backed up with bank statements, invoices, contracts, accountant evidence or tax documents, depending on the lender.

Is one year’s accounts enough for every self-employed person?

No.

One year’s accounts may not be enough in every situation.

It may be harder where:

• The business is completely new
• The applicant has changed industry
• Income is irregular
• Bank statements do not support the declared income
• There are large debts or high commitments
• Credit history is weak
• The deposit is small
• The accounts show a low profit
• The applicant needs a high loan-to-income multiple

In these cases, waiting for two years of accounts may be better, or the applicant may need a different lender strategy.

A good broker should not simply say yes or no. They should review the full case and explain the realistic options.

Frequently asked questions

Do I need two years of accounts to get a mortgage?

Not always. Many lenders prefer two years of accounts, but some may consider one year’s accounts if the case is strong and the income can be clearly evidenced.

Can I get a mortgage with one year’s accounts?

Yes, it may be possible with some lenders. This often works better if you have previous experience in the same industry, strong bank statements and a clear explanation of how your income is generated.

Can a limited company director get a mortgage with one year’s accounts?

Possibly. Some lenders may consider one year’s finalised accounts, but they will usually look closely at the company structure, income, business bank statements and trading history.

Can sole traders get a mortgage with one year’s tax return?

Some lenders may consider this, depending on the case. Sole traders are usually assessed using HMRC Tax Calculations, Tax Year Overviews and bank statements rather than limited company accounts.

Can lenders use multiple income sources?

Yes, some lenders may consider multiple income sources, including salary, dividends, self-employed income, locum income and rental income. The income must usually be evidenced and acceptable under the lender’s criteria.

Can pension contributions or business expenses be added back for mortgage affordability?

In some cases, certain figures may potentially be considered differently by lenders, including pension contributions, one-off expenses or specific accounting adjustments. This depends entirely on the lender’s criteria, the accounts and the supporting evidence.

Can rental income help my mortgage application?

It can help in some cases, depending on the lender and how the rental income is declared and evidenced. Some lenders may use rental income as part of the affordability assessment. For clients with property income, Check: buy-to-let mortgage may also be useful.

Why do self-employed mortgage applications take longer?

They can take longer because lenders often need more documents and may need to manually assess the income. A well-packaged application can help reduce delays.

Speak to WIS Mortgages about your self-employed mortgage

If you are self-employed, a limited company director, a contractor, a locum professional or someone with multiple income streams, you may have more options than you think.

You may not always need two years of accounts, but you do need the right lender, the right documents and the right case presentation.

At WIS Mortgages, we help clients across Reading and the wider UK with complex income mortgage applications, including self-employed mortgages, limited company director mortgages, locum doctor mortgages and multiple income cases.

With both mortgage and accountancy experience, we can help you understand how your income may be viewed by lenders and whether there are suitable options available.

Speak to WIS Mortgages today on 02030111986 to find out whether your income can be used for a mortgage.

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Your home may be repossessed if you do not keep up repayments on your mortgage.