One in four reconsidering self-employment due to current financial uncertainty
One third of those questioned said they do not have enough savings to last three months if they find themselves out of work. The research highlighted the struggle many in the self-employed field are feeling but also the resilience and entrepreneurial spirit of many in the sector, said the bank.
Over a third of the self-employed applied for government support during the last 18 months and one quarter of self employed home owners requested a mortgage holiday period during the past 12 months.
The data showed 51 per cent of those self employed in the UK think their financial situation has become worse over the past year with three in five saying that their monthly earnings have decreased since the pandemic began and 41 per cent believe that they will not be able to return to their pre-Covid earnings in the foreseeable future.
“For the self employed that feel pessimistic about their future home buying prospects after this difficult period, there are options available to help,” Jon Cooper, head of mortgage distribution at Aldermore said. ‘It’s important to seek advice from a broker who can provide whole of market experience and to explore specialist lenders options, as they function to dig into the detail of an applicant that may have complicated income streams lifting traditional barriers to getting on the housing ladder.”
Just over a third of the self-employed in the UK applied for government support during the last 18 months and one quarter of self employed home owners have requested a mortgage holiday period over the last year.
Banks such as Santander and Bluestone have recently introduced some key changes, making it easier to lend to the self-employed. Santander announced earlier this year that it will discard the 2020-21 tax year for self-employed borrowers who have been hit by the Covid-19 pandemic and Bluestone reduced rates by up to 1.87 per cent.
In July, NatWest confirmed it will launch a new proposition for self-employed borrowers following reports regarding the treatment of these customers.
However, while economic conditions remain difficult, Aldermore’s research also shows resilience from within the self employed sector, with 46 per cent of the self employed in the UK saying adapting their businesses to help them stay afloat.
“To help improve your credit profile, make sure to show evidence a steady stream of work,” added Jon. “It is important to show a strong pipeline of upcoming work to reassure lenders. Simple steps such as registering on the electoral roll, paying off debts and meeting regular payments make a difference.”
Paul Shearman, mortgage, protection and GI proposition director, The Openwork Partnership said: “Buying a home is an important step in life but many would-be borrowers may feel it is unobtainable for them right now due to the pandemic. With Aldermore’s expanded range, there will be more opportunity for those borrowers who need an individual approach to lending, whether they are self-employed, have a low deposit, or blips in their credit history.”
Aldermore relaunched back into the 95 per cent LTV market in March with a two-year and a five-year pilot deal priced at the same rates for a limited period. The lender withdrew from the market completely in April 2020.