For a long time, the dream of homeownership for the self-employed, contractors, and those on zero-hour contracts felt like it was hidden behind a "permanent income" paywall. Many high-street lenders have traditionally required a significant chunk of your income to be from a permanent PAYE role - often as much as 50% - to even consider a low-deposit application.
But the tide is turning. According to recent industry modelling, nearly 1 in 10 non-PAYE aspiring homeowners have less than a 10% deposit. Recognising that "income is income" regardless of whether it’s paid once a month or at variable intervals, some innovative lenders are now opening the door to 95% LTV (Loan-to-Value) mortgages for the non-traditional workforce.
If you are a freelancer, gig worker, or contractor with a 5% deposit, here is how you can secure your mortgage.
1. Highlight Your Track Record
While a permanent contract might be missing, your bank statements and tax returns tell a different story. Specialist lenders are now looking for a "track record" rather than just a payslip.
-
Self-Employed: You will typically need to provide tax calculations and tax year overviews (SA302s) for the past two years.
-
Contractors: Lenders will want to see your current contract terms, invoices, and a history of consistent work—usually at least 12 months in the same field.
-
Zero-Hour Workers: Stability is key here. Most lenders looking at 5% deposit deals will want to see at least 12 months of history to average out your earnings.
2. Take Advantage of Specialist Products
Exciting new products have entered the market specifically for clients who don't fit the standard PAYE box. For example:
-
Expanded LTV: Some lenders have scrapped the requirement for 50% of income to be permanent, now offering up to 95% LTV for CIS (Construction Industry Scheme) workers, rental income, and even gig work.
-
High LTI Multipliers: For self-employed applicants, it is now possible to find deals that offer up to 5.5x Loan-to-Income (LTI), allowing you to borrow more based on your actual earnings.
3. Clean Up Your Credit Footprint
When you only have a 5% deposit, lenders view the application as higher risk. This means they will be stricter with your credit score.
-
Ensure you are on the electoral roll at your current address.
-
Avoid taking out new credit in the six months leading up to your application.
-
Check your credit report for any "blips"—at 95% LTV, even small errors can lead to a rejection.
4. Know Your Limits
While 95% mortgages are a fantastic leg-up, they often come with specific caveats:
-
Property Price Caps: Many low-deposit schemes limit the property value to around £600,000.
-
New Builds: Be aware that some lenders are more cautious about 5% deposits on new-build houses or flats due to concerns about immediate value depreciation.
-
Repayment Only: You will almost certainly need to apply for a repayment mortgage rather than an interest-only deal.
The Bottom Line
Being a non-PAYE worker shouldn't mean you're stuck in the "rental trap" simply because you haven't saved a massive 10% or 15% deposit. With the emergence of lenders who understand the modern workforce, your variable income and 5% deposit could be exactly what you need to get your keys.
The first step? Speak to a broker who specialises in low deposit mortgages to explore all of your options, including exclusive deals for non-PAYE borrowers that can only be accessed through a mortgage adviser - get started here to be matched with the right broker today.