About 300,000 self-employed people are willing to buy a home, but say getting a mortgage is the hurdle, according to research from Pepper Money.
Research from Pepper Money’s Specialist Lending Study (SLS), based on a survey of 4,000 British adults, shows that 300,000 self-employed entrepreneur Adults with unfavorable credit conditions expect to be in a financial position to purchase within the next three years.
Yet confidence in getting a mortgage remains low, and many feel left out by the way their income is assessed.
In addition to those with unfavorable credit terms, demand is also pronounced among the wider self-employed population, with 80% wanting to own their own home – higher than both full-time (73%) and part-time workers (66%).
The research shows that 76% of all self-employed people believe their employment status makes it more difficult to obtain a mortgage, underscoring the ongoing challenge of aligning non-traditional income with standard lending criteria.
At the same time, there are clear gaps in understanding the homebuying process. More than a third (36%) of all self-employed people say they don’t know how much deposit they need to buy a home, highlighting a significant advice gap early in the journey.
Concerns about existing debts also determine confidence. Of those who started self-employment in the past three years, 81% say they worry that their current debt levels could affect their chances of securing a mortgage, highlighting how financial insecurity increases perceived barriers to homeownership.
Self-employed borrowers often struggle to meet the income requirements of regular lenders.
Without a regular paycheck, it can be difficult to demonstrate consistent income, even if the underlying finances are solid.
The SLS also points to a broader rise in adverse lending in the UK. This year’s research shows that 30% of British adults, or 16.6 million people, have experienced adverse credit conditions at some point in their lives, up from 15.3 million the year before.
Economic pressures continue to push more people toward missed payments and debt.
Paul Adams, sales director at Pepper Money, said: “The start of the tax year is often the time when many self-employed people take stock of where they stand financially and start thinking seriously about their financial goals, including home ownership.
“What this research makes clear is that ambition is not the problem. This is telling at a time when confidence in other parts of the market is low. Self-employed customers are often financially resilient, but their income can be harder to assess through standard lending models.
“That’s where specialty lenders and brokers play a critical role, helping to provide a clearer picture of affordability and open access to homeownership in financially sustainable and responsible ways. As the workforce continues to change and financial lives become more varied, it’s important that the mortgage market keeps pace with that reality.”