BROKERS have urged lenders to change their attitudes to the self-employed as they say “they shouldn’t be regarded as more risky”.
The unemployed face a different set of challenges to the employed when it comes to proving income – it may not be as regular and may come from multiple different places.
At a time when unemployment is rising, most recently to 5.2%, and AI is seeing many roles made redundant, the employed are now not truly the safer bet, experts claim.
Many lenders perceive the self-employed, due to variable and complex income streams, as riskier. But they are more likely to be able to hustle themselves out of a tight spot as they are more comfortable with risk and can join the dots, experts add.
Ken James, Director at London-based Contractor Mortgage Services, said the self-employed shouldn’t be regarded as more risky than the employed.
He added: “Being employed was the gold standard of financial security, steady income, predictable progression, even a job for life. That perception has long shaped lending decisions, with employed borrowers typically given more options than the self-employed. But the modern labour market is changing fast and permanence no longer guarantees stability.
“Redundancies and restructures can affect even long-tenured employees, meaning a regular payslip isn’t always the safety net it once appeared to be. Meanwhile, lenders can be short-sighted when setting criteria that favour employed applicants while placing greater hurdles in front of the self-employed.
“Variable income is often viewed as risky, yet it can reflect diversification across clients or revenue streams, reducing reliance on a single source. Many self-employed borrowers are also highly adaptable and used to navigating uncertainty. Perhaps the real measure of risk today isn’t predictability but resilience. The views of lenders need to change.”
Lenders can be short-sighted
Rohit Kohli, Director at Romsey-based The Mortgage Stop, said many employees are in danger with AI automation just around the corner.
He continued: “In practice, ‘risk’ isn’t employed versus self-employed. It’s income resilience and how well it can be evidenced. With unemployment up at 5.2%, a payslip isn’t the safety blanket lenders assume, especially in roles exposed to restructures and automation.
“Many self-employed clients can plug gaps quickly: take contract work, pivot services or even go back into PAYE if needed. The issue is proving that flexibility on paper. Two solid years of accounts, healthy retained profit and cash reserves often beat a single employer in a shaky sector.”
Louis Mason, Content and Communications Director at London-based Oportfolio Mortgages, said the current terms need updating.
He added: “The traditional idea that employed borrowers are automatically the ‘safe pair of hands’ is starting to feel a little outdated. A payslip once signalled stability, but in today’s market it can simply mean you’re one restructure away from uncertainty.
“Self-employed borrowers are often seen as riskier because their income varies, yet that variation often reflects diversification, multiple income streams rather than a single point of failure. Many have already proven their resilience by adapting to changing markets, managing irregular cashflow and surviving economic shocks.
“As AI and automation reshape employment, the real conversation shouldn’t be employed versus self-employed, but adaptability, track record and financial behaviour in my opinion. In many cases, being self-employed doesn’t mean higher risk, it means that income has already been stress-tested in the real world.”
Treat self-employed like a red flag
Craig Fish, Director at London-based Lodestone Mortgages, said the self-employed are generally more resilient than the employed.
He continued: “With unemployment at 5.2%, AI reshaping industries and government policy squeezing businesses, ‘employed’ no longer means ‘safe’. An employed borrower has one income source, tied to one employer.
“One restructure, one round of cuts and income gone. Many self-employed borrowers have multiple clients, multiple income streams. Yes, income varies but variable often means diversified, and diversification reduces risk.
“These borrowers know how to manage cashflow. They’ve learned to adapt because they’ve had to. Real risk isn’t a payslip versus an SA302. It’s sustainability, resilience and track record. In today’s economy, that distinction matters more than ever.”
Mark O’Connor, Mortgage Advisor at Online Mortgage Advisor, said the self-employed are the lifeblood of the UK.
He added: “I do find it staggering that in these times some lenders still do look on self-employed income with a frown and place certain restrictions, whether it be loan-to-value or what income they will accept.
“There are many elements to self-employed income, whether it be net profit from a sole trader or dividends and salary from a limited company. It’s good that some lenders will look at a borrower’s share of net profits from a limited company, too, and in my opinion more lenders should look at this.
“Entrepreneurs and the self-employed are the lifeblood of this country and put so much into their businesses, and lenders should be a little more relaxed when dealing with them.”
Self-employed can actually be a smarter bet
Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said self-employment is still seen as a red flag.
He continued: “A payslip isn’t job security, but resilience is and the self-employed have it. Too many lenders still treat self-employed like a red flag, when in 2026 it’s often the opposite.
“With unemployment up at 5.2%, the idea that PAYE is automatically safer is starting to look like yesterday’s thinking with jobs that can vanish overnight, while business owners are used to adapting, pivoting and finding the next opportunity.
“Variable income doesn’t automatically mean unstable. It often means diversified, multiple clients, multiple streams and a track record of making money in the real world.
“The risk isn’t self-employment; it’s poor evidence and dated underwriting. So, the fix isn’t to shut the door, it’s smarter underwriting that properly reflects sustainability, not just a payslip.
“If lenders want to back the property aspirations of the UK’s growth engine, they need to reframe the question from ‘are they employed?’ to ‘is the income proven, resilient and repeatable?’”
Patricia Ogunfeibo, Founder & non-practicing Solicitor at London-based tenant2owner, said lending criteria are outdated.
She added: “Self-employed borrowers aren’t a greater risk, they can actually be a smarter bet. They build businesses, manage cash flow and weather uncertainty on a daily basis. They know how to prioritise paying the bills. It seems some outdated lending criteria still treat the self-employed as ‘complicated.’
“That’s not a risk, though, it’s a system that simply hasn’t caught up. But the self-employed face this every day, and they are a group that keeps the country from going completely broke.
“Risk can always be reduced with evidence, and evidence produced through knowledge. The path to homeownership shouldn’t be narrower just because your income doesn’t come in a neat monthly payslip.”
A safety net, not a risk
Michelle Lawson, Director at Fareham-based Lawson Financial, said lenders are missing out on a lucrative sector.
She continued: “The self-employed should be seen as a safety net, not a risk. The buck stops with them and it isn’t in their interest to fail. Most self-employment is borne from employment where people think they can operate better or make more money for themselves rather than the corporate hierarchy and strangulation.
“Add to this the flexibility of modern life, the resilience and ability to adapt and diversify quickly and it becomes considerably more attractive.
“In the current uncertain jobs climate with rising unemployment figures, the employment tap can be switched off at short notice as businesses feel the pressure, so growth in the self-employed sector is all but guaranteed.”
