Four in five UK self-employed entrepreneurs have struggled to get a mortgage.

A study claims they face being locked out of the mainstream mortgage market, despite accumulating a combined wealth nest egg of £81.5 billion.

Specialist lender Together says many say being unable to prove a steady monthly income has limited their chances of getting a home loan with 87% of workers surveyed agreeing it is “much harder” to get a home loan because they’re self-employed.

In addition, 83% of those who work for themselves say the mainstream’s current mortgage lending criteria is pitted against them and 87% are even prepared to take on extra work to prove their income on paper.

Together is calling for a re-think of automated “one-size fits all” decisions by banks to unlock the home-owning ambitions of millions of self-employed workers, kick-starting the housing market by freeing up rental properties, as well as providing opportunities for developers.

A spokesperson says: “The country’s self-employed workers are crying out for lenders to support their home-owning ambitions. In a lot of cases, despite holding an average deposit of £51,000 saved for a new home, self-employed customers still contend with major issues, financial prejudices and a lack of understanding of their incomes and finance needs from mainstream banks. 

“In economically tough times, lending appetites for mortgage applications considered complex dwindle to almost nothing, which we would say is unfair when it comes to the nation’s self-employed wealth creators.

“Specialist lenders can offer bespoke underwriting to get to know the borrower’s individual circumstances. It would be fantastic to see other lenders following suit, providing the same level of support for this large but underserved section of the UK’s workforce.” 

Together’s latest research shows that the self-employed market now stands at 4.4million and income levels for the sector have grown by 7% since Covid and 26% in the last 10 years. 

Meanwhile, separate analysis predicts lending to self-employed mortgage applicants is set to rise by 67% over the next five years – from £20.9 billion in 2023 to £34.8 billion by 2029.

The UK regions have already seen considerable growth in wealth created by self-employed workers. However, their growing bank balances do not necessarily mean they can invest in bricks and mortar.

Top 5 self-employed property hotspots by Region:

The largest sums of income generated by the self-employed at a city level show considerable wealth which could be used to inject energy into the housing market to help alleviate the housing crisis.

At an individual level, Together’s research found that the self-employed have an average of £51,000 actively saved for new-home deposits. And almost one in five are looking to buy property in the next 12 months (19%), rising to over two in five looking to buy at some point in the future (45%), and over two-thirds of these (68%), will be looking for a mortgage

However, the high rejection rates and other long-standing mortgage issues facing the self-employed means that many do not see property ownership as a viable option. The survey reveals that four in five (83%) feel that mortgage lending criteria is stacked against them. The survey revealed that 82% have reconsidered their self-employment status altogether. 

The study comes as the UK’s economic growth falls below expectations, and rising costs, in part brought by Chancellor Rachel Reeves’ tax hiking Budget present another barrier as mainstream lenders default to double down on one-size fits all business models.