What Mortgage Deposit Do I Need If I’m Self-Employed?

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What mortgage deposit do I need if I’m self-employed?

Generally, mortgage lenders ask for a deposit of at least 10% of the property value for your mortgage. However, a lot of the mainstream lenders aren't set up to deal with incomes that aren’t from straightforward employment. 

When you’re self-employed, your income is harder to verify - so you might be asked to put down a larger deposit. Having your finances in order will really help you when it comes to putting in your mortgage application. 

If you can’t save for a big deposit, you still have options. A specialist mortgage broker (like us!) can find the right mortgage for you, and prepare your application so it looks as good as possible to a lender. Our Mortgage Experts have plenty of experience finding mortgages for self-employed people, including freelancers and contractors. Get started by making an enquiry.

Why does being self-employed make mortgages difficult?

Big banks and high street lenders can panic a bit when they get an application from someone who doesn’t have a set income. They prefer people who have a set, consistent income so they can predict you’ll be ok making mortgage repayments. 

So if you’re self-employed, it all comes down to being able to prove that your income is stable. Lenders base all their decisions on risk, and want to be reassured that you’ll have enough money coming in each month to pay your mortgage. 

Being self-employed means your income could vary from month to month. This is why lenders see self-employed applicants as more ‘risky’ than someone who’s employed and brings the same amount home every month. It’s not really fair, because you work hard and earn good money. Most of the time you can actually earn more being self-employed than you would in employment, but because your income is harder to prove then it can be trickier to get a mortgage. 

Most high street banks and mainstream lenders just aren’t set up to deal with incomes that aren’t straightforward, and they’ll turn you down without considering your situation. But, all is not lost! This is where specialist lenders come in. Specialist lenders deal specifically with people who don’t fit the mould of the ‘perfect mortgage application’. They have plenty of experience lending to self-employed people, and will consider your application on a case-by-case basis. 

Some specialist lenders don’t usually deal directly with the public. They won’t show up in your online searches, and your bank won’t tell you about them. They’re only available through specialist mortgage brokers. So you’ll need to find a broker who can find you one of these lenders. That’s where we come in! 

Our easy-to-use platform matches you with a broker who specialises in helping people like you. We don’t do easy. Where other lenders and brokers shy away from a challenge - complex stuff is all we do. Make an enquiry to get matched with your perfect broker. 

Will being self-employed with bad credit affect my mortgage deposit? 

Lenders don’t just look at income when deciding whether to give you a mortgage. They’ll weigh up how risky it could be to lend to you based on their previous experience of lending, and which type of borrower is most likely to default on their mortgage.

Because of this, if you have a history of bad credit on top of complex income, you might be asked to put down a bigger deposit. A bigger deposit means less risk for the lender, and can also give you access to better interest rates

However, there are specialist lenders offering bespoke mortgages for self-employed people with bad credit scores. These mortgages are underwritten especially for you and your specific situation. Specialist lenders consider people on a case-by-case basis, and are experts in providing tailored mortgages for people with complex financial history.

A specialist mortgage broker can find the right mortgage for you, and prepare your application so it looks as good as possible to a lender. If you're worried about bad credit affecting your mortgage deposit, get in touch to find out your options.

Can I use my Self-employment Grant as a deposit?

This depends on the mortgage lender you go to. Some lenders might accept deposits sourced from a Self-employment Grant, but a lot won’t. 

When it comes to your deposit, you need to show where the deposit has come from (this is to help tackle money-laundering). Acceptable mortgage deposit sources include: savings, stocks and shares, equity from another property, inheritance, and gifts.

If your situation isn’t straightforward, it’s best to work with a mortgage broker who can find you the right mortgage with the right lender. 

Self-employed mortgage options with a small deposit

We get it. Saving for a big deposit can be really difficult for a lot of us. The good news is, it’s possible to get a mortgage as a self-employed person with a small deposit, but it’ll depend on your individual circumstances and what your loan to value ratio (LTV) is. Your loan to value ratio is the percentage figure of the property you are getting the mortgage loan on. For example, if the property is worth £200,000, and you have a £20,000 deposit to put down, the mortgage will be 90% loan-to-value. 

Your LTV directly impacts which mortgage rates you’ll get. Generally, the higher your LTV then the higher your interest rate will be. This is because there’s more of a risk to lenders when you borrow a lot of money. They’re investing in your property, and there’s a risk that your home could decrease in value, making for a bad investment. 

If you can manage to save for a small deposit, you have a few options to help you get on the property ladder:

5% deposit scheme

The UK government has announced a new scheme for 2021, meaning you can get a mortgage with just 5% deposit. With the government helping mortgage lenders with part of the loan, it means you won’t have to save for a large deposit, and you won’t be be restricted to new-build homes in order to get on the property ladder. Read more about the 5% deposit scheme.

Help to Buy

Help to Buy is a government scheme for first time buyers. It enables you to get on the property ladder with a 5% deposit. The government gives you an equity loan to put towards the cost of a new-build home. The loan ranges from 5-20% of the property value (40% in London), and you'll need to purchase your home from a registered Help to Buy homebuilder. Read more about Help to Buy.

Shared Ownership

Shared Ownership is where you buy part of a property and rent the rest. You take out a mortgage on the bit you're buying, then pay a reduced rent on the bit you don't own. You’re able to buy between 25-75%, and can buy some or all of the remaining share when you can afford to. This means you only need to put a deposit down on the bit that you’re buying, rather than the cost of the whole home. Read more about Shared Ownership.

Buy with friends or relatives

Buying a house with friends or a family member is becoming a popular way to get on the property ladder. Combining deposits and sharing all the monthly living expenses can be  appealing. It’s a big commitment though - you'll be jointly responsible for the mortgage payments. If one of you can't pay, you'll still have to cover the cost as a group. You also can't sell the property unless everyone on the mortgage agrees.

Gifted deposits

If you’re struggling to save for a deposit but have family that can help, then you could look at using a gifted deposit. You can’t technically ‘borrow’ a deposit from a family member, but it can be ‘gifted’. Lenders will want to know that you won’t have to pay back a deposit on top of your other outgoings. You might have to provide written evidence, signed by the person giving the deposit money to you.


Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.

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