Bad credit borrowers more likely to get a mortgage than self-employed
In its Mortgage Saver Review report, Trussle found that the self-employed made up 23 per cent of all specialist cases received by lenders. Since the company was set up in 2015, it has seen applications from self-employed borrowers rise by 54 per cent.
Despite this, the self-employed are less likely to get a mortgage application approved than other types of specialist borrower.
Some 89 per cent of borrowers with bad credit are approved for a mortgage compared to 86 per cent of retirees and 76 per cent of self-employed applicants. Those with a small deposit were also looked on more favourably than borrowers who work for themselves, enjoying an 85 per cent approval rate.
First-time buyers had the best approval rates overall at 90 per cent.
Miles Robinson, head of mortgages at Trussle, said: “The government encourages entrepreneurship, but the mortgage industry is not keeping pace with how fast the self-employed sector is expanding. This group is being let down time and time again with a challenging and confusing mortgage journey, which is resulting in less mortgages being approved by lenders.
“Enough is enough. The industry must work collaboratively to update its requirements and close this ‘mortgage access gap’ to support the self-employed.
“We’re using our own data to design flexible products for specific under-served groups, like the self-employed. This will be a significant step in our commitment to making mortgages fairer for all.”
See YourMoney.com’s Top tips for self-employed workers applying for a mortgage for more information.