Self-Employed Bad Credit Mortgage
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Self-Employed Bad Credit Mortgage
Anthony McQuilliam explains how the mortgage process works for self-employed individuals with bad credit.
Podcast approved by The Openwork Partnership on 24/03/2026.
What are the main challenges for self-employed individuals with bad credit in securing a mortgage?
Ultimately, bad credit can reduce the amount of lenders you’ve got access to. The actual process of getting a mortgage isn’t any harder for the self-employed – the harder part is the bad credit. It’s not impossible, but you’re seen as a higher risk to lenders purely because you have fallen behind on your payments. That means some lenders will charge you more each month for a mortgage, or you may need to put a much bigger deposit down. There are definitely routes through this, but there could be extra hoops to jump through.How can self-employed individuals with bad credit improve their chances of getting a mortgage? Any top tips?
First is your deposit. If you’ve got a 5% deposit, you could still get a mortgage depending on how bad your credit is – but lenders will charge you substantially more for it. If you can get to a 15% deposit, it opens up the majority of bad credit lenders, giving you a much greater chance of having your offer accepted. Another key point is that if you can prove you’ve brought your debt up to date, it stands you in much better stead for a mortgage than someone who’s never repaid their missed payments.What documentation do self-employed individuals with bad credit need when applying for a mortgage?
It depends on how you’re self-employed. To prove your income, you’d need your last two years’ tax calculations and tax year overviews – or your last two years’ limited company accounts. That’s completely dependent on how your self-employment is set up. You then need bank statements for your business and your personal accounts. You would also supply your deposit proof and your ID: a driving licence or passport. Lenders may request certain other things, but those are the main documents you would need.Can self-employed individuals with bad credit get a mortgage without a large deposit?
A smaller deposit just limits your options. Certain lenders will allow you to get a mortgage with bad credit with just a 5% deposit, which is great news if you can afford the monthly repayments. But they tend to lock you in for five years, rather than a shorter-term fixed rate, depending on how bad the credit is. Not very many lenders do that. It can be a little harder, but there are definitely a few providers that could help you out.What interest rates can self-employed individuals with bad credit expect to pay on a mortgage?
It varies a lot. We might speak to a lender and, depending on your credit and your deposit, the rates will change. A couple of lenders don’t quite have high street rates, but they’re also not bad credit lenders. It’s a middle ground – they’re not a million miles off the high street, and much cheaper than the bad credit lenders. I can’t pluck an interest rate out of thin air because there are so many different variables: your deposit, how bad the credit is, which lender we go with, the term you choose and whether it’s a two, three or five-year deal.Speak to an expert
Our highly experienced Advisers are ready to help you with either buying or remortgaging a home, protecting your property and lifestyle along with saving you time and effort, ensuring you have a competitive deal right for you.
What role does credit score play for a mortgage as a self-employed borrower with bad credit?
Credit score itself isn’t a huge issue. We’d need to look at the actual report, because every lender’s got their own different internal scoring systems. We need the report to see if you’ve had any missed payments, CCJs or defaults. It’s all about the details – the amounts, dates and situations.Do many mortgage lenders specialise in lending to self-employed individuals with bad credit?
There are certainly lenders whose sole market is to help people with bad credit. They’ve got multiple products set up for this, and there are plenty of lenders out there. It’s all about speaking to a broker who has the right experience to find a deal to suit you.What steps can self-employed individuals with bad credit take if they have been declined for a mortgage?
First, have you just gone directly to your bank, and been declined? There’s a high possibility they may not lend to you because of that bad credit. The next step is to speak to someone with access to substantially more lenders. We can speak to these lenders – or it could be that your own bank can still help you out. We would find out why you’ve been declined – it could be that you need a bigger deposit. Or, perhaps you need to wait another three months because the credit issue was relatively recent and needs to be more historic. So speak to us – we’ll find out why it’s been declined and then put a game plan in place. Even if you can’t do anything right now, perhaps in three, six or 12 months you might be able to apply and get it agreed at that point.How long does it take for self-employed individuals with bad credit to get a mortgage offer?
This varies. It usually takes longer than going to a high street lender, because of the bad credit issues. They want to go through more details, which can take a bit longer.What else do we need to know about a self-employed bad credit mortgage?
The main thing is to look at the opportunities with someone who can access multiple lenders. If you have bad credit, you need to speak to somebody experienced in that. Your own bank may well decline you straight away, leading you to feel disheartened – but it could be that you can still get on the property ladder with another lender. Then, in a couple of years time, once you’ve been paying your mortgage on time and your credit’s better, you could remortgage back to the high street for a better deal.Key Takeaways
- Bad credit is the primary challenge, as it reduces the number of accessible lenders, rather than the self-employed status itself.
- Increasing your deposit, particularly to 15%, significantly improves your chances of acceptance by opening up the majority of bad credit lenders.
- You must prove you have brought any past debts up to date, as this stands you in much better stead than having unrepaid missed payments.
- Lenders focus on the specific details in your credit report (such as missed payments, CCJs, or defaults – including the amounts and dates) rather than the overall credit score.
- If your own bank declines you, you should speak to a broker who can access other lenders, which can be a stepping stone to remortgaging to a better high street deal once your credit history improves.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Approved by The Openwork Partnership on 24/03/2026.
Published/recorded 03/2026.