The complexities associated with assessing variable incomes from self-employment and/or multiple revenue streams have long posed difficult questions for high-street mortgage lenders.

Consequently, many self-employed individuals and those with diverse income sources have found it increasingly difficult to meet mainstream lending criteria – which often revolve around a consistent income and a long employment history.

Now this is nothing new. However, reiterating the rising importance and value of specialist lenders for intermediary partners to help meet the ‘modern’ borrowing needs of both potential and existing homeowners is something which never gets old.

When digging a little deeper into these ‘modern’ borrowing needs, it’s worth painting a bigger picture regarding the size and scale of these requirements.

According to a report from Statista, based on original data from the Office for National Statistics (ONS), as of March 2024, there were around 4.25 million self-employed workers in the United Kingdom. During the recorded time-period of May 1992 to March 2024, self-employment in the UK was suggested to have grown steadily, from a low of just 3.2 million in December 2000, to a peak of over five million at the start of 2020.

This illustrates the rising numbers of borrowers requiring underwriting and criteria for self-employed income.

The ONS point out that even the slight decline of around 700,000 since the pandemic was partly due to people describing themselves as employees rather than self-employed after the furlough scheme was created. This too is a cohort of people with income evidence that may not fit a ‘tick-box’ machine.

Additionally, the rise of ‘other’ income streams poses a challenge for affordability assessment. In June 2023, it was reported that more than one in three adults in the UK, or 20 million people, had multiple incomes. By 2025, the research by Utility Warehouse estimated that, 47% of the UK’s adult population could be earning an extra income, compared with less than 10% in 2017.

The newly published 2024 UK Future Workforce Index survey emphasises the critical role of freelancers who are now suggested to make up 22% of the workforce. However, freelancing is not without its challenges due to a perceived lack of financial stability, with 48% identifying this as a major concern and this plays into the fact that more people are looking to generate multiple or unusual income streams to fulfil their rising financial obligations.

This is especially apparent for those first-time buyers in and around the London, with market analysis from NHG Homes uncovering that as many as 48% of the capital’s prospective first-time buyers are planning to take on extra work to save the amount needed for a house deposit.

Whether embarking on extra revenue generating opportunities and/or seeking financial assistance from family members, it’s evident that first-time buyers require significant levels of financial commitment and support to get onto the property ladder. With many also relying on access to relevant government initiatives, affordable housing schemes, innovative mortgage options and specialist residential market which continues to rise in prominence.

This continued rise in prominence is largely due to an innate ability to service the needs of those first-time buyers, and existing homeowners, whose circumstances might be deemed to be a little out of the ‘ordinary’. Whatever ‘ordinary’ means in the current financial climate. This is largely due to the implementation of a common-sense approach to lending through manual underwriting processes which can generate a better understanding of individual financial scenarios, incomes streams and credit histories, therefore ensuring that applications can be judged on their own merit rather than adopting a one-size fits all approach.

And, as personal and household financial situations become ever more complex, we strongly believe that this type of approach represents the future of the residential mortgage market and in meeting ‘modern’ borrowing needs.

Grant Hendry is director of sales at Foundation Home Loans