Updated: December 15, 2021

How to get a Mortgage if You’re Self-Employed with Bad Credit

Self-employed with bad credit and looking for a mortgage? The brokers we work with can help you get the best rates available.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 15, 2021

Applying for a mortgage as a self-employed worker can be a more complicated process. If you  also have a bad credit history then things become much trickier.

By following this guide, you’ll have a better understanding of how to find the right lenders who can help someone in these situations and what process you should follow in order to give your application the best chance of success.

Can you get a mortgage if you’re self-employed and have bad credit?

Yes, it’s possible. Whilst your chances of getting a mortgage with a mainstream lender might be slim, there’s a number of specialist lenders who have the knowledge of how to help someone with a bad credit record.

Who will offer you a mortgage and how many options you will have depends on:

Bullet Tick How far back your self-employed earning accounts go
Bullet Tick Exactly what your credit records show
Bullet Tick Your general eligibility, including how much deposit you have    

If you have at least one year of accounts whilst working for yourself and your adverse credit details are within certain thresholds, then you will have some choice as to which lender to use for your mortgage. Those thresholds vary but can include having only one CCJ in the past 12 months or a years’ evidence of full adherence to a current debt management plan.

However, if you have more than one item reflecting bad credit on your report within the past 12 months, your options will shrink. Similarly, if you only have three months of accounts or are working with financial projections, the number of potential lenders who can help you will be smaller.

It’s also worth noting that in relation to lenders willing to work with applicants with a bad credit history, some lenders will view them the same as employed applicants earning through PAYE, while for others, the self-employed element might further complicate the chance of success.

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What’s the best way to apply for a mortgage in these circumstances?

If you’re self-employed with a bad credit history, there’s a number of straightforward steps you can take to give your mortgage application the best chance of success…

Step 1. Save up for a deposit

As with all mortgages, the bigger your deposit, the better mortgage terms you’ll be offered, including a lower interest rate. The same holds true where the applicant works for themselves and has a bad credit record.

Very few lenders would consider an applicant in this position with only a 5% deposit and requiring a 95% loan-to-value (LTV) mortgage. If you can put together a 10% deposit or higher, then you’ll be in a better position to secure a mortgage, with a 25% deposit or larger giving you the best chance of finding a lender willing to agree your mortgage.

Step 2. Prepare your documents and download you credit reports

Getting your documents ready in advance could save you time in the long run. As a self-employed professional, you’ll need at least 2-3 years’ accounts, although some lenders will accept less. You’ll also need proof of ID and proof of address – see our guide to mortgage applications for a complete rundown of the paperwork you’ll need.

Moreover, downloading and optimising your credit reports before you proceed is vital if you have bad credit. Small tweaks to your reports like having outdated information removed and challenging any inaccuracies on your files can make a big difference.

Step 3. Speak to an experienced mortgage broker

The smartest way to find out which lenders best cater for self-employed applicants with bad credit is by speaking with a mortgage broker who has experience dealing with these types of situations. Their knowledge and experience could help you save time and money.

They can also help you prepare all the evidence of earnings you’ll need if you’re self-employed and other additional information to support your application that, perhaps, you’d not even thought of.

Using our unique advisor-matching service, we can introduce you to a broker who fits this description. If you get in touch we can arrange for someone to contact you straight away.

Finding the right mortgage lender

It probably won’t surprise you to hear that you may not have heard of the lenders who cater for people in this situation. That’s because specialist lenders work directly with mortgage advisors and brokers and aren’t available on the high street or even online for customers to contact.

Specialist lenders who are known to offer bad credit mortgages and cater for the self-employed include.

Bullet Tick Norton Home Loans
Bullet Tick Bath Building Society
Bullet Tick Pepper Money

However, even though they will consider various bad credit activity and self-employed applicants on a case by case basis, your best bet for finding a lender who offers mortgages to people who fall into the self-employed and bad credit niches is a specialist broker.

Your mortgage broker will identify which lenders are best placed to help with your particular situation. They’ll basically manage your application from start to finish so you’ll never feel like you’re doing this on your own.

Get matched with a mortgage broker who works with self-employed applicants

When you have a mix of complex issues relating to your finances and employment, the easiest and most stress free way to apply for a mortgage with a good chance of success comes by speaking with someone who has the expertise of dealing with these types of circumstances on a daily basis.

This is why the shrewdest decision you can make, right from the beginning, is seeking the help of an experienced mortgage broker. Their insider knowledge of how to frame applications for someone who has a bad credit record could prove invaluable.

Call 0808 189 0463 or make an enquiry and we can arrange a free, no-obligation call with a mortgage broker who has experience of arranging bad credit mortgages for the self-employed today.

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We can help! We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in bad credit mortgages. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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