First-time buyers also increasingly need help from a partner to buy their first property.
According to research by Aldermore, almost two thirds (62%) of self-employed people do not know how they will manage to buy their first home.
Furthermore, a third (32%) of recent first-time buyers said they had to give up being self-employed to get a mortgage.
For one in three (32%) raising the deposit was cited as the biggest obstacle, while for one in seven (14%) the biggest hurdle was just being able to secure a mortgage.
One in eight (12%) added that saving for a deposit was so hard they had to take on a second job to earn extra money.
Introducing better mortgage products (37%) and adapting the criteria for self-employed borrowers (33%) were critical to improving their situation.
Cheaper and simpler
Overall, the lender’s quarterly First Time Buyer Index found that two thirds (67%) of first-time buyers believed that getting on the property ladder was very difficult – unchanged from the last quarter of 2016.
The key request from first-time buyers was to address rising house prices (46%), two in five (39%) wanted an extension of the government’s Help to Buy schemes and 30% just wanted to see the whole house buying process simplified.
The number of those joining forces with their partner to fund their deposit has risen to 45% from 38% in the last quarter, meaning the number of people buying with their partner has also increased considerably from the last three months of 2016, from 45% to 64%.
More support needed
“First-time buyers are the driving force of the property market but our index reveals just how hard it is for them to get on the ladder, even more so for those who are self-employed,” said Aldermore commercial director for mortgages Charles McDowell.
“Low levels of confidence among these groups will have ramifications further up the housing chain so it’s imperative that more is done to support both segments of our society, particularly with levels of self-employment continuing to rise in the UK.
“Raising a deposit is something that continues to be cited as the biggest hurdle by first-time buyers, with a large proportion unable to do so without family help. House prices are inevitably impacted by demand and supply and more needs to be done to address the latter,” he added.
The survey also found that first-time buyers were making significant sacrifices to their lifestyle and often faced family pressures to buy.
Almost one in five (18%) said they were under pressure from their family to buy, while a further 18% added they were feeling the pressure from their partner.
Nearly one in three (30%) cut back on eating out, almost a quarter (23%) cut out holidays while more than one in five (21%) work longer hours.