Getting a bad credit mortgage if you are self-employed

Applying for a mortgage when you are self-employed can be challenging, because you need to provide several documents to lenders for them to assess your affordability. If, for example, you’ve suffered bankruptcy, County Court Judgments or IVAs, you may unfortunately be turned down by lenders – which can make the task seem impossible.

But, in these circumstances, all is not lost. There are indeed mortgages available for self-employed people with credit issues. You will need to know who to approach, and what they will be looking for in an applicant.

Even though mainstream lenders shy away from bad credit applications, there is a sector of the market that is not accessible to the public. It contains smaller lending companies that specialise in lending to individuals with bad credit history.

These mortgages are geared to meet the borrower’s individual needs, and they come with criteria that looks beyond the usual credit rating. Often, these mortgages are underwritten manually, rather than being dictated by a computer algorithm.

How long after a bad credit event can I get a mortgage?

The amount of time that has passed since the infringement can greatly influence a lender’s decision. An event in the last 6–12 months is likely to be too recent for lenders to consider a mortgage.

However, if it has been over 12 months, you should find it a bit easier. Furthermore, if it has been 6 years since the event(s), then you are likely to have few issues. This is because, after 6 years, any bad credit event is cleared from your file.

If you want to let some time pass before you apply then don’t worry – you can still prepare for an application. Specialist market lenders focus on what you’ve done in the meantime to improve your credit rating. Our complete guide has many tips that can help you improve yours.

If you’re the opposite, and want to get a mortgage as soon as possible, you may have to endure slightly higher interest rates.

At Just Mortgage Brokers, we have helped obtain many mortgages for the self-employed with bad credit. If you want to get started on your journey or just have a question, reach out today.

Mortgage lenders if you’re self-employed with bad credit

As mentioned, mainstream lenders tend to shy away from any individual with a bad credit history. Due to the narrow lending criteria they impose, you are instantly seen as a potential risk.

This is where specialist bad credit lenders come in. Instead of using strict criteria that instantly declines you, they listen and will assess your application individually, taking a much wider view of your current and past situation.

An issue with these specialist lenders is that they aren’t always easy to find. A good amount of them can only be accessed through a third-party broker or an intermediary.

Don’t let this deter you, because a broker will give you the best chance of finding a competitive deal. By identifying these deals, you could save thousands of pounds overall due to things like reduced interest rates.

Bad credit mortgage rates if you’re self-employed

As discussed, bad credit items on your file deem you a higher risk to any mortgage lender. This, combined with a self-employed status, can further sway their judgement and your options for a mortgage deal are therefore going to be limited.

To counter the increased risk, many lenders may be willing to extend a mortgage at a higher interest rate than normal. This is especially true if the bad credit event(s) occurred within the past 12 months.

This said, rates for mortgages for self-employed people with bad credit are often shifting. As well as each individual application being different, it can be difficult to give a precise guide on rates.

Using a broker for your bad credit self-employed mortgage

Doing your own research into all the lenders and products that might be available to you can take a huge amount of time. Furthermore, you will only be limited to the lenders who work with the general public.

As experienced experts, we understand all the challenges involved in both self-employment and bad credit. With our in-depth knowledge of the market, we can match you with the most suitable lender. This will ensure that you are offered the most competitive product based on your circumstances.

If you’re self-employed and are looking to obtain a mortgage, get in touch. You’ll be paired with one of our expert advisors, who will listen to your situation and advise you accordingly.