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Mortgages for Self-Employed People With Bad Credit

Self employed with bad credit? No problem! See how an expert broker can help

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 16, 2022

Getting a mortgage when you’re self-employed can be complicated at the best of times, but throw bad credit into the equation and things can get really tricky.

That doesn’t have to be the case, though. We work with expert bad credit mortgage brokers who specialise in complex deals like this and they successfully arrange finance for self-employed people with bad credit history every day. We’ll even introduce you to them for free!

In this guide, you’ll learn how to get a bad credit mortgage when you’re self-employed and where to turn for the right advice.

Can I get a bad credit mortgage if I’m self-employed?

Yes! There are mortgages available for self-employed people who have bad credit, but seeking expert advice before you apply is highly recommended. It could well be the case that you need a specialist lender with an appetite for risk, since you fall into two niche categories. A whole-of-market broker, like the ones we work with, can help you find the right lender.

The level of risk involved in the deal will come down to a number of factors, such as…

  • How long you’ve been self-employed for
  • The cause of the bad credit
  • The circumstances surrounding your bad credit
  • How much deposit you have
  • How closely you meet the lender’s affordability criteria

Getting the most favourable interest rates possible is a case of matching the level of risk to the lender with the right appetite for it, and the brokers we work with know the market back to front. They will match you with the mortgage provider who is best positioned to help you.


One of the main benefits of applying through a broker is that they can introduce you to the right lender – in this case, one who specialises in self-employed professionals with bad credit – first time, and this could potentially save you time, money and marks on your credit file.

Why you shouldn’t go direct to a lender

If you’re self-employed and have bad credit, you fall into two niche areas of lending and many mortgage providers aren’t flexible enough to offer you the best rates. Approaching lenders directly comes with the risk of missing out on a better deal elsewhere or, worse, being declined for a mortgage and ending up with further marks on your credit report (such as a hard credit check for a mortgage).

This could jeopardise any future applications for finance as mortgage lenders are wary of too many borrowing requests in a short space of time. Plus, most of the lenders who consider bad credit are only accessible via a broker anyway.

Make an enquiry and we’ll introduce you to an expert on bad credit mortgages for self-employed customers for a free, no-obligation chat.

Did you know… You could access 30% more of the mortgage market with a specialist Bad-Credit broker on your side – Get Started with an OMA-Expert to unlock more deals and increase your chance of mortgage approval.

Make an enquiry for a free, no-obligation chat and we’ll match you with a broker experienced in helping other customers in similar circumstances.

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What criteria will I need to meet?

Expect the mortgage lender to look into your bad credit and employment situation. As a self-employed individual, the criteria you need to meet isn’t really any different than for customers in full-time employment, but the way your income is assessed will be.

Most lenders will want you to produce two-to-three years of accounts or tax calculations, although it may be possible to find a provider who is happy with 12 months, depending on how much additional risk your bad credit adds to the deal.

It will likely help your cause if your accounts show steady income during the period they cover, as fluctuating earnings could raise concerns with the lender. If your income is patchy, a strong track record in the industry you trade in can help offset some of the risk.

How will my bad credit be assessed?

Bad credit can pose an added complication if you’re self-employed, but the good news is that it doesn’t have to be a deal-breaker. While some mortgage lenders might reject your application or offer hike-up rates if you have bad credit, specialist mortgage providers are known to take a broader, more flexible view of applications.

Bad credit mortgage providers will base their lending decision on the following…

  • The type of bad credit you have: Some credit issues are more severe than others. For example, bankruptcy is considered the most serious and a missed mobile phone bill payment is generally easy for mortgage lenders to overlook.
  • The age of the credit issue: The longer it’s been on your file, the better. The most severe types of bad credit, such as bankruptcy, will need to be discharged.
  • The reason for the credit issue: An unexpected life event is easier for lenders to overlook than gross financial mismanagement, especially if your financial conduct has been responsible since the issue was registered.

Lenders who offer bad credit mortgages may be willing to take the above factors on board as well as how closely you meet the rest of their eligibility and affordability criteria. There are also ways that you can offset the risk posed by your bad credit…

How to lower the risk

If you’re concerned that your status as a self-employed individual coupled with your bad credit might make getting a mortgage difficult, keep in mind that there are ways you can lower the level of risk to increase the number of approachable lenders.

They include…

  • Put down extra deposit: Most mortgage lenders prefer customers to have at least 10-15% deposit (although 5% deals are available) but if you have bad credit, putting down extra is usually recommended as it could give you access to better rates.
  • Declare at least three years of accounts: The more accounts you have to prove your income, the better. Having at least three years’ worth will likely give you access to a wider range of deals due to the increased number of lenders you could approach.
  • Apply through a mortgage broker: Applying for your mortgage through a broker can also help you land a more favourable deal as they will be able to suggest other ways to lower the risk and help you find the best lender for your circumstances.

How much will I be able to borrow?

Specialist bad credit mortgage lenders don’t calculate affordability much differently for self-employed borrowers compared to customers in full-time employment. They will take a look at your accounts and cap their lending based on a multiple of your average earnings.

Some mortgage lenders will limit the amount you can borrow to 4.5x income, others x5 and a minority x6. Just bear in mind that the higher income multiples might be more difficult to attain because of your bad credit.

Applying through a mortgage broker can help you maximise your borrowing potential. They can introduce you to the lender where your income will go the furthest.

For example, let’s say you have three years of accounts. You had two average years followed by a very strong 12 months. Many lenders will take an average of those earnings from all three years, but with the help of an expert broker, you could find one that will base your mortgage offer on your most recent year of trading only, giving you the option of a larger loan.

Make an enquiry and we’ll introduce you to an expert broker who can help.

Will it make a difference if it’s a joint mortgage?

Yes. The income multiple you qualify for will be based on the combined earnings of everyone who will be named on the mortgage.

One thing to keep in mind, though, is that your bad credit will be factored in when the lender is assessing the overall strength of the application. It’s possible to get a joint mortgage when one applicant has credit issues, but a specialist bad credit lender would usually be needed to make sure you’re getting the best deal.

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How to get a mortgage with bad credit if you’re self-employed

Step one should be to seek professional advice from a whole-of-market mortgage broker. If you’re self-employed and have bad credit, you fall into two niche categories, and that could mean the right lender is more difficult to find if you go it alone.

Not only will a specialist broker find you the best deal for your needs and circumstances, they will offer bespoke advice every step of the way and help you with your application.

Speaking of your application, here are a few things you can do to prepare for it…

  • Check your credit reports: You’ll want your file to be in the best possible shape, so checking your reports yourself will give you the chance to challenge any inaccuracies. You can find out how to check your files in our guide to credit reports.
  • Pay off any debts you’re in a position to clear: Any existing debts you have can impact on your affordability. If you are close to clearing any or in a position to pay them off, it could be worth delaying your application until they have been settled.
  • Save up as much deposit as possible: Keep in mind that you’re likely to need more than the minimum to offset the risk your bad credit causes.
  • Gather three years’ worth of accounts: Although there are lenders for customers with accounts covering a year or less, having more than the minimum will give you access to a wider range of lenders, and therefore a broader number of deals.

Article key takeaways

  • 01

    Getting a mortgage with bad credit is possible

    Bad credit mortgage applications are a common query, and the mortgage brokers we work with deal with this on a day-to-day basis. With so many different deals and lenders out there, there's likely to be one right for you.
  • 02

    A broker can help you get it done right

    With bad credit and being self employed the right mortgage broker can be the difference between approval and decline, particularly with bad credit mortgages, it's important to get the right advice
  • 03

    Understand your credit report

    It's important to understand your credit report and see what types of bad credit appear as different lenders will accept different types of bad credit and depending on what type of bad credit you have, this will determine the route your expert broker will take.
  • 04

    Find the right mortgage lender

    Choosing the right mortgage lender is absolutely vital. The best way to find your best chance of approval is to speak to an expert. The brokers we work with are specialists in finding people with bad credit a mortgage right for them.

Ask us a question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in both bad credit and self employed mortgages.

Ask us a question and we'll get the best expert to help.

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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!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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 who 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.

Self employed with bad credit? No problem! Get started with your perfect mortgage broker

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