Majority of self-employed say it is harder to get a mortgage

Jake Carter

November 2, 2021

mortgage prices

Almost two-thirds of self-employed individuals believe it is more difficult for them to secure a mortgage, according to Foundation Home Loans.

The research, carried out by BVA BDRC on behalf of Foundation, also showed that three out of five self-employed people believed some lenders do not want to deal with them.

Of those interviewed, 100 were self-employed and 200 employed, the majority of the self-employed interviewed (59%) said it takes longer to apply for, and secure, a mortgage because of their self-employed status.

More than half (51%) said there was a restricted choice of lenders available, resulted in only 39% of self-employed people thinking it is now a good time to be a homeowner, compared to almost half (47%) of employed respondents.

The self-employed were more likely than their employed counterparts to have used the services of a mortgage adviser or independent financial adviser (IFA) when arranging their current mortgage, 44% compared to 31%.

George Gee, commercial director at Foundation Home Loans, said: “What is clear from this exclusive research is we are seeing a disconnect between the perception of self-employed borrowers in terms of what they can secure in the mortgage market, and what might actually be available to them, based on their financial circumstances, their experience over the last 12 months, and their ongoing credit-worthiness.

“There is no doubting however that for many self-employed, that perception of restricted mortgage choice is indeed accurate post-pandemic, their options have been reduced simply because the way these customers are assessed by some lenders no longer meets what is required in this new landscape of more complex employment and income types.

“A blanket approach based on a very limited view of borrowers’ recent financials, or an assessment purely based on the sector they work in, cannot give a fair view of their creditworthiness, and it’s because of this that more self-employed borrowers would be better served looking at non-mainstream routes.

“However, there is a lot to be positive about here, particularly in terms of the strength of the financials of these self-employed existing, and prospective, homeowners; the majority have not endured negative financial experiences since the onset of the pandemic, and only a small number are being declined for mortgages.

“There are some key messages we need to get across to the self-employed borrower base though and they involve outlining that not all lenders approach them in the same way.

“This research also stresses the ongoing need for adviser intervention, and for us as an industry to continue to direct the self-employed down the advice channel because by doing this they will have a much better chance of securing mortgage finance, and their customer experience will be greatly enhanced.”

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