But many struggle to access mortgages under standard lending criteria
An estimated 300,000 self-employed individuals with adverse credit expect to be in a position to buy a home within the next three years, but most of them believe their employment status makes getting a mortgage harder, according to new research from Pepper Money.
The lender’s Specialist Lending Study, based on a survey of 4,000 UK adults, found that 76% of self-employed respondents said self-employment makes it more difficult to secure a mortgage, suggesting confidence remains weak even among those who expect to be financially ready.
Homeownership aspirations were also higher among the self-employed than among employed respondents. The study found 80% of self-employed adults aspiring to buy, compared with 73% of full-time employees and 66% of part-time employees.
The research pointed to gaps in understanding early-stage requirements. More than a third (36%) of self-employed adults said they did not know what size deposit they would need to buy a property.
Concerns about existing borrowing were also prominent among newer self-employed workers. Of those who became self-employed in the past three years, 81% said they were worried their current level of debt could affect their chances of getting a mortgage.
Pepper Money said the findings came as more adults earn income through self-employment, contracting or multiple streams, and argued that mortgage processes have not always adjusted to reflect how applicants evidence earnings.
The study also suggested this shift is influencing housing decisions, with 46% of UK adults considering downsizing to reduce housing costs described as having become self-employed within the past three years.
Pepper Money also reported an increase in adverse credit experiences across the population. It found that 30% of UK adults — equivalent to 16.6 million people — have experienced adverse credit at some point, up from 15.3 million the previous year and the highest figure since the study began.
“The start of the tax year is often the moment when many self-employed people take stock of where they are financially and start thinking seriously about their financial goals, including homeownership,” said Paul Adams (pictured right), sales director at Pepper Money.
“What this research makes clear is that aspiration isn’t the problem – this is telling at a time when confidence is low in other parts of the market. Self-employed customers are often financially resilient, but their income can be harder to assess through standard lending models.
“That’s where specialist lenders and brokers play a vital role, helping to build a clearer picture of affordability and opening access to homeownership in financially sustainable and responsible ways. As the workforce continues to change and financial lives become more varied, it’s important the mortgage market keeps pace to reflect that reality.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
