This is according specialist lender Together ’s Residential Property Market Report.

With the last twenty years seeing the number of self-employed already swelling from 3.2m to 4.3m including a further 183,000 in the first quarter of 20242, Together’s research highlights the growing need for support that self-employed aspiring home owners need in accessing finance and the challenges this group faces securing mortgage agreements from high street lenders.

They may have fluctuating income levels, multiple sources of income or unable to provide evidence of income all of which places them outside the normal criteria for a loan.

According to new research from Together, a fifth (22%) of rejected mortgage applicants who would be classed as ‘non-standard’ were rejected because they were self-employed and 10% said this was due to having sporadic income.

Challenges faced by the growing numbers of self-employed have meant that just 5% of self-employed mortgage applicants have been successful within the last 12 months3.

However, the changing nature of society as well as work and lifestyle patterns means that the sector is likely to continue to expand still further in the coming years. In fact, there was a year- on-year rise in the number of full-time self-employed people this year, from April to June 2024 which Together has also seen reflected internally with increased enquiries for home ownership loans.

This matches a broader trend, where the number of homeowners and potential homeowners with ‘non-standard’ situations, is on the rise nationally – highlighting the demand for a more flexible approach from the industry to help non-standard applicants.

A third (29%) said that greater flexibility on mortgage repayments including the ability to overpay or underpay would improve their mortgage application experience.  And 14% said it would be most helpful if lenders standardised the definition of and criteria for non-standard applicants.

Together chief executive officer of personal finance John Barker commented: “During economic downturns the tendency of mainstream lenders to reassess their strategies will lead to an environment that is more cautious or risk averse. In turn this will always be more favourable to employed borrowers with perfect credit histories over say lending to the self-employed or those with past credit blemishes – even where the latter can put down a larger deposit.”

He added: “As more and more people find themselves to be a sole trader, freelancer, side-hustler or majority shareholder a more inclusive approach is required from the financial services industry where common-sense is applied to lending with applications judged on merit – looking at the whole picture, not just your credit score or loan-to-income ratio.”