The average UK house price has exceeded £300,000 for the first time, reaching £300,077 in January 2026, according to Halifax, one of the UK’s largest mortgage lenders. This reflects continued demand across the UK housing market, but it also creates additional challenges for first-time buyers and those who are self-employed or operate through limited companies.
In the UK, mortgage lenders assess affordability based on strict criteria set by the Financial Conduct Authority (FCA). For employed applicants, lenders typically assess PAYE salary. However, for self-employed individuals, directors of limited companies, and contractors, lenders usually assess income using:
• SA302 forms issued by HMRC
• Tax Year Overviews from HMRC
• Limited company accounts filed with Companies House
• Dividend and salary income
• Usually the last 2 years of trading history, although some lenders accept 1 year
This means that how your income is structured, declared, and reported to HMRC can directly affect your mortgage eligibility and borrowing capacity.
There are some positive developments for UK buyers. Mortgage rates have begun to ease, with some UK lenders now offering fixed-rate products below 4%, and the Bank of England has indicated that base rate reductions may occur later this year if inflation continues to fall. This could gradually improve affordability for buyers across England, Wales, Scotland, and Northern Ireland.
House prices are expected to rise modestly by around 1% to 3% during 2026, suggesting a more stable market rather than rapid price growth. However, affordability and lender criteria remain key factors, particularly for self-employed applicants, where accurate and well-prepared accounts are essential.
If you are planning to apply for a mortgage in the UK, preparation is critical. Lenders will expect up-to-date accounts, properly declared income, and clear financial records. Planning ahead, ideally 6 to 18 months before applying, can significantly improve your chances of approval and the amount you are able to borrow.
At Amanah Accountants, we support UK self-employed clients, limited company directors, and contractors by ensuring their accounts, tax returns, and income records are prepared correctly and in line with HMRC and UK mortgage lender requirements.
Disclaimer:
This article is for general information purposes only and relates to UK tax and mortgage practices. It does not constitute financial, mortgage, or investment advice. Mortgage approval is subject to UK lender criteria, affordability checks, and individual circumstances. You should seek independent advice from a UK-regulated mortgage advisor authorised by the Financial Conduct Authority (FCA) before making any financial decisions. Amanah Accountants accepts no responsibility for any actions taken based on this information.