The money is real. It just wasn't counted.
Self-employed, on contract, paid largely in bonus or commission, or holding down two jobs. Your income is perfectly genuine — but every lender counts it differently, and one saying no tells you almost nothing about what another would say.
David Bourne
Where applications usually come apart
- Self-employed. One lender averages your last two years, another uses the most recent year, a third wants three years of accounts. If your figures are rising, that difference alone can change what you can borrow substantially.
- Company directors. Many lenders count salary plus dividends only, and ignore profit retained in the business entirely. Some will consider retained profit. Which one you approach matters enormously.
- Contractors. A day rate can be treated as a decent annualised income, or as risky short-term work, depending entirely on the lender's policy.
- Bonus and commission. Sometimes counted in full, often halved, occasionally ignored. If it is most of your pay, this alone decides the outcome.
- Overtime and shift allowances. Counted in full by some lenders, halved by others, disregarded by a few. For shift workers, NHS staff and anyone whose basic is modest but whose rota is not, this single policy difference can decide the whole application. Consistent overtime across several months of payslips is far easier to have counted than occasional overtime.
- Two jobs, or a second income. Frequently only the main job counts, which can remove a genuine third of your household income at a stroke.
Why the decline may say nothing about you
An affordability decline is arithmetic, not character. The lender applied its own formula and the answer came out short. Change the formula — by going to a lender whose rules fit how you are actually paid — and the same paperwork can produce a very different number.
This is why the self-employed so often get turned down at the bank they have used for fifteen years. The bank is not doubting them. It simply has one way of counting, and their income does not fit it.
What helps
Up-to-date accounts or tax calculations rather than last year's, an accountant who can answer a question quickly, and being honest about the shape of your income from the start. The worst outcome is an application built on the most flattering interpretation, which then falls apart when an underwriter reads the documents.
The questions I hear most
How long do I need to have been self-employed?
Most want two years of figures. Some will consider one full year with a good record, particularly if you were employed doing the same work beforehand.
My latest year was much better. Does that help?
It can, but only with lenders that use the most recent year rather than an average. Choosing the right one is the whole difference.
Will my bonus count?
Sometimes fully, often partly, occasionally not at all. Two or three years of consistent bonus is much easier to have counted than one unusual year.
Does my overtime count?
It depends entirely who you ask, which is the whole problem. Some lenders take a proportion, some take all of it if it is regular and evidenced, and some ignore it. For a lot of shift workers it is the difference between a yes and a no.
Does a second job count?
With some lenders, yes, particularly if you have held it a while. With others, no. It is one of the clearest examples of the same facts producing two different answers.
Tell me how you are paid and I will tell you which lenders might count it differently.
Was it more than one thing?
Most declines have a single trigger, but not all. If any of these sound closer, they are worth a read too.
Declined on maternity leave
Your salary has not changed. The three payslips they looked at have. Usually fixable with a letter.
Declined over your overdraft
Nothing on your credit file, and still a no. Bank statement conduct is assessed separately.
Declined because of your partner's credit
A joint application takes the more cautious view of the two files. There are realistic routes.
Declined by a specialist lender
The one that worries people most. Specialist lenders draw their lines in different places.
Back to all the reasons a mortgage gets declined · How David helps after a mortgage is declined