The market for self-employed mortgage applicants is projected to grow significantly, with lending set to rise from £20.9 billion in 2023 to £34.8 billion by 2029, marking a 67% increase, according to Together’s Residential Property Market Report, December 2024. The rise reflects the expanding population of self-employed workers and the growing demand for tailored financial solutions.
Over the past two decades, the self-employed population in the UK has increased from 3.2 million to 4.3 million. This year alone saw an additional 183,000 self-employed individuals in the first quarter, further underscoring the shift in employment patterns. However, obtaining a mortgage remains a challenging task for many in this group due to inconsistent income streams, multiple revenue sources, or difficulties proving income. Together’s research reveals that 22% of mortgage rejections among “non-standard” applicants stem from self-employment, while 10% are due to sporadic income.
How Much Can You Borrow?
Wondering how much you can actually borrow? The answer varies based on your income, deposit size, and credit profile. While every lender has different criteria, a general rule of thumb is that you can borrow around 4 to 5 times your annual income. In some cases, specialist lenders may extend this to 6 times your earnings if you have a strong application.
Don’t waste time guessing. Use our “How Much Can You Borrow” calculator to get an instant estimate of your borrowing potential. This tool considers factors like your income, deposit, and existing debts to give you a personalised estimate in seconds.
Discover your borrowing potential with our calculator
For self-employed individuals navigating the complexities of mortgage applications, having a clear understanding of your financial position is crucial. Contractor Mortgage Solutions’ How Much Can I Borrow Calculator is an essential tool designed to help you estimate your borrowing potential based on your income structure and unique financial circumstances.
Flexibility in mortgage offerings
Despite the challenges self-employed individuals face, the changing societal dynamics and employment trends present an opportunity for innovation in mortgage products. Together’s report highlights the growing demand for greater flexibility in mortgage repayment options, with 29% of surveyed applicants expressing a preference for the ability to overpay or underpay based on their financial situation. Meanwhile, 14% suggested that standardizing criteria for “non-standard” applicants would significantly improve their experience.
Understanding how much you can borrow is the first step in setting realistic property goals, so make sure to check your borrowing capacity before house hunting.
An inclusive future for mortgage lending
John Barker, CEO of personal finance at Together, emphasized the need for a holistic approach to lending, especially during uncertain economic times. “Mainstream lenders often prefer employed borrowers with flawless credit records, sidelining self-employed applicants who may offer significant deposits,” he said. “As more individuals become sole traders, freelancers, or business owners, the financial industry must adopt common-sense lending practices that consider the full financial picture, not just credit scores.”
Empowering self-employed homeowners
As the self-employed sector continues to grow, innovative solutions and industry adaptability will be critical to supporting aspiring homeowners. Contractor Mortgage Solutions offers tailored advice and assistance to ensure your journey to homeownership is as smooth as possible. Reach out today to explore your options and take control of your future.