Self-employed rejected for mortgages despite increased earnings
Research from Nottingham Building Society found that 12% of self-employed borrowers have been turned down for a home loan, highlighting the difficulty those who work for themselves face when getting a mortgage.
The rejections aren’t all down to having a lower income though, as the lender found that nearly half (48%) of the self-employed workers earned about the same or more than in their previous employed job.
Around a quarter said they were earning more and the overwhelming majority had previously been in full-time employment.
With the latest data showing the number of self-employed people in the UK rising, to around 4.69 million, an increase of 182,000 in the three months to March, mortgage brokers believe lenders need to do more to support this section of the workforce.
Nearly nine out of ten brokers (86%) said there should be more mortgage choice for the self-employed and nearly a quarter (23%) expect applications from the self-employed to rise this year. Around 33% of brokers saw a rise in self-employed mortgage applications last year.
Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services (part of The Nottingham), said: “Self-employment is growing rapidly and being your own boss should not mean you cannot successfully apply for a mortgage.
“Our study shows self-employment can still be an issue when applying for a mortgage with nearly one in eight being turned down despite many earning more than they were in full-time employment.
“Lenders are responding with new mortgage deals for self-employed customers being launched regularly so there are options available and demand. The key to ensuring that you do not struggle to be accepted is to get expert independent help and to explore the full range of options.”