Mortgage arrears while self-employed are usually tied to a specific trading problem: a major client stopping work, a seasonal quiet spell that ran longer than usual, or a period of ill health that stopped you earning. This is one of the harder situations to remortgage from, and speaking to your current lender as early as possible matters more than anything else while the arrears are ongoing.
This page looks at what a self-employed applicant can do while in arrears, how income evidence changes once trading has recovered, and when remortgaging may become realistic again. For the general position, see remortgaging with mortgage arrears, and for how self-employed income is assessed, see self-employed with bad credit.
On this page
This page covers
- Credit issue
- Mortgage arrearsUsually stays on your credit file for 6 years from the date recorded.
- Employment
- Self-employedLenders commonly ask for tax calculations and accounts covering one or more years.
Read the main guide: Remortgaging when you are self-employed and have bad credit
In short
- Mortgage arrears while self-employed often follow a specific, identifiable trading problem.
- Speaking to your current lender early, and agreeing a plan, matters more than anything else while arrears are ongoing.
- Most lenders will want to see arrears cleared and a settled trading period before considering a new deal.
- Fresh accounts covering the recovered period are usually the strongest evidence once you are ready to apply.
Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
What commonly causes self-employed mortgage arrears?
Arrears among self-employed homeowners often follow a specific event rather than a slow, general decline: the loss of a main client or contract, an unusually long quiet season, an illness or injury that stopped you working, or a business cost that came in far higher than expected. Recognising and being able to describe the specific cause is the starting point for explaining it later.
Because self-employed income can already vary from month to month, it can take longer to notice that a payment has been missed compared with someone on a fixed salary, which is another reason to keep a close eye on the mortgage account specifically.
Talking to your lender while trading is difficult
Lenders must treat customers who are struggling fairly and consider forbearance options, such as a temporary payment arrangement. This applies whatever your income source, but a self-employed applicant may need to explain their situation slightly differently, since there is no employer or payslip to point to.
- Contact your lender as soon as you think a payment may be missed, not after
- Be ready to explain what has changed in your trading and for how long
- Ask what forbearance options are available, such as a temporary arrangement
- Keep records of the arrangement and stick to it once agreed
How arrears history is likely to be viewed once trading recovers
| Position | What a lender is likely to want | Where to look next |
|---|---|---|
| Currently in arrears | Arrears cleared, or a settled payment arrangement, before considering a new deal | See remortgaging while in arrears |
| Arrears recently cleared | A short period of settled payments and improving accounts | A product transfer with your current lender may be more realistic first |
| Arrears cleared some time ago | Accounts and bank statements showing a stable trading position since | A wider range of lenders is more likely to be available |
General information only. Individual lender approaches vary considerably for arrears cases.
Evidencing that your trading has stabilised
Once the immediate problem has passed, the strongest evidence is usually a run of accounts, SA302s or bank statements covering the period since, showing income has returned to a settled level. A short written account of what happened, when it was resolved, and what has changed to reduce the risk of it recurring can help an adviser present your case clearly.
Considering your options once payments are back on track
A product transfer with your existing lender does not usually require a full affordability reassessment where you are not borrowing more, which can make it a more realistic first step than remortgaging elsewhere soon after arrears. Raising extra money at this stage, for example to clear the debts behind the arrears, secures more against your home and is worth discussing with a specialist adviser rather than deciding alone. Free advice from MoneyHelper or StepChange is available at any stage.
What may affect a self-employed mortgage arrears remortgage
| Factor | Why it matters |
|---|---|
| Whether arrears are current or cleared | Most lenders will want arrears cleared, or a settled arrangement, before considering a new deal. |
| How the arrears arose | A specific, resolved trading event is generally easier to explain than an unclear or ongoing pattern. |
| Time since arrears were cleared | A longer settled period since usually widens the range of lenders that may consider an application. |
| Current trading position | Recent accounts and bank statements showing stable income matter more than the arrears themselves. |
| Whether other credit issues are also present | Arrears alongside defaults or a CCJ from the same period may need explaining together. |
| Property value and equity | A current valuation shows how much equity you have, which can affect what may be possible. |
| Outstanding mortgage balance | What you owe, and whether you want to raise more, sets the loan size a lender needs to be comfortable with. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- A statement of your mortgage account showing the arrears history
- Details of any payment arrangement agreed with your lender
- SA302s or accounts covering the period of the arrears and since
- Business and personal bank statements from the affected months and recently
- A short explanation of what caused the arrears and what has changed
- Confirmation of whether the arrears are fully cleared
Frequently asked questions
Can I remortgage while I am still in arrears?
It is difficult while arrears remain outstanding, since most lenders want them cleared, or a settled payment arrangement in place, before offering a new deal. Speaking to your current lender about forbearance is usually the first step.
How long after clearing arrears can I remortgage?
There is no fixed period. Some lenders may consider an application once arrears are cleared and payments have been kept up for a while, but a longer settled run, with accounts to match, generally widens the options available.
Will a product transfer be easier than a remortgage after arrears?
It can be, since a product transfer with your existing lender where you are not borrowing more does not usually need a full affordability reassessment. A lender can still decide what it offers a customer who has been in arrears.
Do I need 2 full years of accounts showing recovery before I apply?
Not necessarily. Some lenders consider 1 year of figures, but a longer run of accounts showing the trading dip has passed generally helps, especially where arrears and self-employed income assessment are both being looked at.