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Author: Carl Shave-Director
Updated on February 15th, 2024

Self-employed mortgages with bad credit

If you’re self-employed, the task of proving your income and creditworthiness can be challenging. On top of that, having a bad credit record, and then trying to find a mortgage, can seem like a real uphill struggle. It’s almost certain most mainstream lenders will turn you down.

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Self-employed applicants with bad credit events to their name must consider a range of things in order to prepare. This includes business accounts, dividend income, retained profits, assets and confirmed forthcoming contracts. You’ll also need to consider the type of bad credit event (or events), and how much time it has been since they took place.

This is so lenders can establish your affordability and check all the details concerning your bad credit. A minor blotch on your record three or so years ago probably won’t impact your chances very much. However, a more major bad credit event within the last 6–12 months could cause a big problem.

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Can I get a self-employed mortgage if I have bad credit

While it may be difficult, it is possible to get a mortgage for the self-employed with bad credit. With determination, a pragmatic approach and help from an experienced adviser, you should be able to achieve the home loan you need.

Being self-employed, you’ll be used to keeping accurate records, understanding cash flow, creating forecasts, and managing how you get paid. Depending on the level of your business, you may also be working with an accountant. In this case, you will already have much of the proof required by a lender.

Read Our Self Employed Guide

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Fill out our quick and easy Bad Credit calculator below. We only require a few details to see how much you may be able to borrow.


How to obtain a self-employed mortgage with bad credit?

The first step is to acknowledge your bad credit issue(s). From here, you can determine the severity of the issue and how long ago it was. This helps your broker when you come to use their services. You will more than likely need to use a broker to access this niche area of lending.

To obtain a self-employed mortgage with bad credit, you will first need to prove to a lender that you can afford it. You’ll also need to demonstrate that your credit situation has improved since the event occurred.

The process of getting a self-employed mortgage with poor credit may not be as stressful as you imagine. And, by using a broker, you can streamline the process. A broker will assess your situation and use their experience to pair you with the most suitable lender. Of course, they will also ensure that everything else is in check before you apply.

As many specialist lenders do not deal directly with the public, you’ll need to use a broker to assess them. While this might seem like a costly option, you could save thousands in product fees in the long run. This is because a broker could get you a much more favourable deal compared to if you were to apply by yourself.

At The Mortgage Centres, we deal with a variety of bad credit issues. These include and are not limited to CCJs, IVA, bankruptcy or simply a string of late or missed payments. Get in touch today and find out how we could help your situation.

How can I increase my chances of being accepted?

There are several things a self-employed individual can do to improve their chances of success. Some of the best things you can do are:

  • Settle any outstanding debts you have. This will show a lender that you are financially responsible, especially as lenders look at debts during their assessments.
  • Provide a larger deposit. Typically, most people will put down a 10%-15% deposit. However, if you can save up more and provide an extra 5% or 10%, you can heavily increase your chances.
  • Show previous years’ accounts. The more years of accounts you can provide the better. An ideal amount is usually around 3 years, but showing more won’t harm your application.
  • Use a mortgage broker. Brokers are experts in the market and know exactly how to treat an individual based on their circumstances.

To find out more about improving your credit score, you can read our comprehensive guide.

What type of bad credit events can I apply with?

There is no yes and no list when it comes to the type of events that a lender will accept. Some of the most common bad credit events we deal with that you can still get a mortgage with are:

If you are unsure about your bad credit events, get in touch. We can then pair you with one of our expert advisers who will be able to provide guidance.


Bad credit self-employed mortgage rates

Lenders base all their lending decisions and mortgage deals on the perceived level of risk involved with lending. The higher the perceived risk, the higher the interest rate will generally be.

People who are self-employed usually have to go the extra mile to prove that they will be reliable borrowers. Adding poor credit record to this will make it even more difficult to prove your borrowing capabilities. Therefore, it’s likely you will have to accept a higher interest rate than usual.

Mortgage interest rates are constantly fluctuating in general, as the economy and the market shift. This means that it’s never easy to predict and provide a list of ‘best rates’ or give a real indication of what to expect. Furthermore, each application is assessed individually which makes it even more difficult.

It’s also worth bearing in mind that the market is highly dynamic. Therefore, there are many new lenders and products frequently entering the market. In this competitive environment, rates may well become more favourable in future.

To help yourself access the more attractive rates, you should ensure that your application is as thorough as possible by including every piece of information that shows your finances in the best possible light.

You’ll need to show three years’ worth of full, certified accounts detailing your regular income. You’ll also need to provide evidence of forthcoming and ongoing work at reasonable rates. Finally – and arguably most important – you’ll need to show a clean recent credit history since any adverse events took place. Lenders are more concerned with your current financial position than that of the past.

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Self-Employed mortgage lenders with Bad Credit

Lenders available to self-employed individuals who have bad credit are specialists. You’ll have probably discovered that mainstream lenders operate within strict criteria. So, anyone falling outside what they define as their ideal is usually turned away quite quickly.

Having an unconventional income can be enough to make a high street lender’s computer algorithm sound the alarms. By adding bad credit to your name, the shutters will come down.

In response to this mainstream approach, many new smaller lenders have entered the market. They specialise in providing mortgages to people who have experienced financial problems in the past.

Specialist lenders can adopt whatever criteria they choose and take a more open-minded approach to your circumstances. They tend to place far more weight on your current financial status than that in the past. They’ll pay attention to how your credit profile has improved since any adverse credit events, and also look at how your business has grown in recent years.

Bear in mind that these specialist lenders still have to operate under the same regulations as mainstream competitors. This means that your mortgage, money and home will be no less secure than with a more familiar provider. It’s common for them to not advertise publicly or consider direct applications from potential borrowers. Therefore, you’ll likely need to work with an experienced broker to access their products.

Frequently Asked Questions

  • Can I get a contractor mortgage if I have bad credit?

If you have a less-than-perfect credit history, then there is still good news. It is possible for you to get a mortgage as a contractor.

A lot will depend on the severity of the adverse credit event and how much time has passed since it happened. The less severe the event, and the longer ago that it happened, then the less weight it carries.

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