More than three-quarters (77%) believe that being self-employed makes it more difficult for them to be approved for a mortgage, according to a new study from mortgage lender Pepper Money.

Pepper noted that a particular challenge faced by self-employed borrowers is the way that many mortgage lenders calculate affordability based on the average profits made by the borrower over the last three years.

However, the pandemic means that many self-employed people have seen much stronger profits in the last year than in the previous couple of years. Indeed, around a fifth of self-employed people said that their business has made over 10% more profit in the last year than the two preceding years.

Self-employed need a specialist approach

Paul Adams, sales director at Pepper Money, said that it does not have to be the case that self-employed borrowers should have issues in securing a mortgage, noting that some lenders have criteria and processes in place that support such borrowers.

He added: “It’s not just the self-employed who can benefit from this specialist approach. Our research found a quarter (25%) of all workers earn variable income, either from overtime or bonuses and the ability to consider this additional income is often an important factor in helping them to achieve the mortgage they deserve.”