Self-Employed Bad Credit

What are the main challenges self-employed individuals with bad credit face in securing a mortgage?

The main thing is that there are two sets of criteria here that people struggle with. Firstly, you’re self-employed and, secondly, there’s bad credit.

Bad credit doesn’t stop anybody from getting a mortgage. It might just limit the amount of lenders available. It can also increase the interest rates and repayments if you pose a higher risk to that particular lender.

However, we can use net profits, retained profits or projections of income to get you the borrowing you need. There are lots of things we can do to support the self-employed.

How can self-employed individuals with bad credit improve their chances of getting a mortgage?

For anybody with bad credit who’s looking to take a mortgage either now or in the future, sit down with a mortgage broker or go to your bank. Work through your credit report and plan ahead. You can tidy everything up as best as you can – so your report and your bank accounts look great.

If you’re self-employed it’s the same. Book an appointment with us and your accountant – over Zoom call or face-to-face – and the three of us can look at your past income, your future income and your business bank statements.

We’re here to get you ready to apply for a mortgage. Then, when we do put your application in, the lenders will look at your case favourably. Lenders look at your business bank statements and your personal statements, so let’s make sure they look nice and tidy.

What documentation do self-employed individuals with bad credit need when applying for a mortgage?

The only difference for the self-employed is that you may need accountants’ letters or projections and business bank statements to support your income. Not all lenders ask to see business statements and on occasion they’ll be happy with the accounts you’ve filed or your SA302 income calculations and corresponding tax year overviews.

Can self-employed individuals with bad credit get a mortgage without a large deposit?

Yes. 5% deposits are still available to the self-employed. You don’t need to be saving up big amounts of money. Of course, it’s still going to be subject to affordability, whether you’re self-employed or employed.

If you’ve got some recent bad credit, you might need a slightly bigger deposit. But at the point of recording this in August 2025, 5% deposits are available for the self-employed.

What interest rates can self-employed individuals with bad credit expect to pay on a mortgage?

Interest rates are difficult because they’re up and down daily. Whether you’ve got bad credit or you’re self-employed or not, we can’t give you any interest rates without knowing the circumstances.

That means sitting down with us to look through your credit profile and understand your income. That gives us what we need to start looking at lenders, products and interest rates.

Self-employed people don’t pay more interest and you don’t get penalised for being self-employed. With any high street lender, as a self-employed applicant you will get the same product. You won’t pay more for it.

When bad credit comes into the mix, naturally you pose a bigger risk to the lender, so they may charge you a bit more in product fees, underwriting costs or interest rates. Again, that’s not down to being self-employed – it’s just bad credit in general.

What role does credit score play in getting a mortgage as a self-employed borrower with bad credit?

There are two types of lender: those that will credit-score and those that will credit-search. The credit scoring lenders are typically high street lenders that run you through a system, where a computer says yes or no.

Some of the building societies, however, will credit-search rather than score. Here, somebody will pick up your application and work through it manually. If something about your case is particularly good, we can put that over to the underwriter.

So, if we get a case on our desk and it’s a little bit tricky, we can sense-check it. If I had the money, would I lend it to this person? If the answer is yes, there’s a good chance a lender out there will give you a mortgage – it’s just finding them.

Do any mortgage lenders specialise in lending to self-employed individuals with bad credit?

There are lenders whose criteria is particularly sympathetic to self-employed people with bad credit. They like this kind of business, because they can underwrite it well and it’s profitable.

If you’ve got bad credit and you’re self-employed, don’t assume you’re going to struggle. There are actually lenders that make a lot of money from lending money to people like you, and plenty of them.

What steps can self-employed individuals with bad credit take if they have been declined for a mortgage?

If you’ve been declined for a mortgage, first try and find out the reasons why. If you come to us from another broker, any information is helpful. Ask the broker for previous application forms and any information they’ve got on you – or any feedback from the underwriter.

We can look at it and try to preempt what the next lender will think. We’ll prepare you well to get a mortgage secured. The biggest thing is preparation. Don’t rush into an application – work through all your figures and let’s sense-check it.

Look at your business bank statements and make sure that if you’re saying you earn £1,000 a month, we can see this coming out of your accounts. If not, let’s make sure your accountant can back us up or give us something to justify that. There’s always an explanation, but we’re much better to go to an underwriter and explain than leave them guessing.

How long does it take for self-employed individuals with bad credit to get a mortgage offer?

It can actually be faster with a smaller lender than a high street bank. Because they’re manually underwritten, a lot of the lenders that like the self-employed and bad credit can actually do a 24-hour turnaround.

That’s not application to offer, it’s application to initial assessment. But within 24 hours of that application going in, they look at it. If they need any further information, we’ll supply it, and within 24 hours, they’ll be back to us again. That’s really quick.

With a lot of high street lenders, it might be three or four days before they come back to us, purely because of high business volumes. It doesn’t necessarily need to take longer to get a mortgage if you’re self-employed.

What else do we need to know about getting a mortgage if you’re self-employed with bad credit?

The big thing for the self-employed is always affordability. You’re trying to keep your income at a point where the tax liability isn’t too high, but you have enough income to live and borrow on mortgages etc.

Let’s sit down, have a chat, and run through your circumstances and your accounts. Even if you’re not looking at doing something right away, we can get you into the best position possible.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.