The UK’s self-employed workforce is accumulating record levels of wealth, with a combined £81.5 billion in disposable income—enough to fund the average first-time buyer deposit 1.6 million times over.
Yet despite their growing financial strength, four in five entrepreneurs are struggling to secure a mortgage, locked out of the mainstream home loan market due to rigid lending criteria that fail to accommodate fluctuating incomes.
According to new research by specialist property lender Together, many self-employed workers find themselves unfairly penalised by traditional mortgage lenders. A staggering 87% of self-employed individuals believe it is “much harder” for them to obtain a home loan, while 83% say mainstream mortgage criteria actively work against them. The issue has become so pervasive that 82% have even reconsidered their self-employment status due to the challenges of proving a steady income on paper.
The findings come at a time when the UK’s self-employed market stands at 4.4 million, with earnings in the sector growing 7% since Covid and 26% over the past decade. Yet despite this, many self-employed workers remain excluded from homeownership due to outdated mortgage approval processes that fail to accommodate non-traditional income structures.
Together’s Chief Commercial Officer, Ryan Etchells, is calling for a fundamental shift in mortgage lending to better serve the self-employed community.
“The country’s self-employed workers are crying out for lenders to support their home-owning ambitions. In a lot of cases, despite holding an average deposit of £51,000 for a new home, self-employed customers still contend with major issues, financial prejudices, and a lack of understanding from mainstream banks.”
He added that in economically challenging times, banks tend to reduce their lending appetite for complex applications, making it even harder for self-employed individuals to secure mortgages.
“We would say this is unfair when it comes to the nation’s self-employed wealth creators. Specialist lenders can offer bespoke underwriting to assess borrowers’ individual circumstances, and it would be fantastic to see other lenders following suit to support this underserved section of the UK’s workforce.”
Growing demand for self-employed mortgages
While mainstream lenders remain cautious, the demand for mortgages among the self-employed is surging. Together’s research found that nearly one in five self-employed workers (19%) plan to buy property within the next year, while 45% expect to purchase at some point in the future. Of these, 68% will require a mortgage.
Separate forecasts predict that lending to self-employed mortgage applicants will grow by 67% over the next five years, rising from £20.9 billion in 2023 to £34.8 billion by 2029. Yet, many self-employed individuals are still hitting roadblocks when applying for home loans.
Greg Cunnington, Director at Legal & General Mortgage Services, noted that data from their Ignite broker technology platform shows increasing demand for self-employed mortgage searches. In the past 90 days, six of the eight most common income searches were for self-employed applicants, particularly limited company directors. However, only 39% of lender responses were an outright ‘yes’, with a further 11% referred for additional review, meaning 50% of self-employed applicants were rejected outright.
“This shows the opportunity that exists in this marketplace for lenders to better support self-employed clients,” said Cunnington.
The research underscores a growing disconnect between the UK’s rising self-employed wealth and homeownership opportunities. Despite their financial stability and strong savings records, many self-employed workers remain unable to invest in bricks and mortar due to outdated lending models that favour salaried employees.
As the UK’s economy faces slower-than-expected growth and rising costs—including tax increases from Chancellor Rachel Reeves’ Budget—many fear that mortgage approvals for self-employed workers will continue to lag behind, unless lenders take action to modernise and adapt to today’s changing workforce.
With specialist lenders like Together calling for a re-evaluation of mortgage criteria, the question remains: will mainstream banks step up to meet the needs of the UK’s £82bn self-employed wealth creators, or will this growing segment of the workforce continue to be sidelined in the property market?
