Self-Employed and Maximising Affordability: Breaking Down Barriers to Homeownership

For self-employed individuals, getting a mortgage can often feel like a daunting process. In fact, a recent survey revealed that 34% of self-employed individuals have never even applied for a mortgage. Many are hesitant due to the perceived challenges, but the reality is that with the right guidance and preparation, self-employed applicants can secure a mortgage and maximise their affordability potential.

The Challenges Self-Employed Individuals Face

From the survey, 26% of self-employed respondents said they hadn’t applied for a mortgage because they believed the process was too difficult. Others faced obstacles like a lack of business history or finding lenders who understood their situation:

- 15% didn’t apply because their business was less than two years old, making them feel ineligible.
- 25% said the hardest part was finding a mortgage provider willing to lend to them.

Additionally, external factors are also keeping potential buyers on the sidelines:

- 1 in 10 are planning to rent until property prices become more affordable.
- 10% are holding off in hopes of lower mortgage rates.
- 6% are waiting for the Bank of England’s base rate to drop.

How to Maximise Your Affordability

Despite the challenges, there are ways self-employed individuals can improve their chances of getting a mortgage and maximising what they can afford. Here’s how:

1. Get Your Finances in Order  
Lenders will want to see a clear and accurate representation of your financial situation. This usually means providing at least two years of tax returns, along with your SA302 forms, which show your declared income. Ensuring your accounts are well-organised and up to date will give lenders confidence in your financial stability.

2. Consider a Specialist Mortgage Broker  
Since a significant portion of self-employed individuals (25%) struggle to find the right lender, working with a specialist broker can make all the difference. Brokers have access to a wide range of lenders, including those who specialise in self-employed clients. They can help navigate the process, ensuring you’re matched with the most appropriate lender for your unique circumstances.

3. Build a Bigger Deposit  
While this may not always be possible, offering a larger deposit can help boost your application and make you more attractive to lenders. A bigger deposit reduces the loan-to-value (LTV) ratio, meaning you’ll be borrowing less in relation to the property’s value, which can lead to better rates and increase your affordability.

4. Show a Consistent Income  
Stability is key for lenders, so demonstrating a steady or growing income over time is essential. Even if your business is less than two years old, having a strong income history through bank statements, invoices, and contracts can help prove that your business is sustainable.

5. Know Your Options  
The mortgage market for self-employed individuals is constantly evolving. Even if you’ve been told in the past that you don’t qualify, lenders are becoming more flexible. By exploring options with a broker who understands self-employed finances, you can open doors to more tailored products.

Looking Ahead: What to Watch For

If you're among the 10% waiting for lower mortgage rates or the 6% hoping the Bank of England’s base rate will come down, it’s important to keep in mind that timing the market is tricky. Rates fluctuate, and while waiting might seem like a good strategy, it could mean missing out on today’s opportunities. 

The self-employed can often feel like they are at a disadvantage when it comes to securing a mortgage, but with the right preparation, advice, and approach, the path to homeownership doesn’t have to be so difficult.

At Mortgage321, we specialise in helping self-employed individuals navigate the mortgage process, ensuring you’re in the best possible position to secure a mortgage and achieve your homeownership dreams. Get in touch with us today to find out how we can help maximise your affordability and find the perfect lender for your needs.

Need Help?

Our team at Mortgage321 has decades of experience working with self-employed clients. Contact us on 01255 440142 or email [email protected] to explore your options and take the first step towards homeownership today.