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Homeownership ‘only a dream’ for many self-employed

Michael Lloyd

September 25, 2019

More than a million self-employed people who do not currently own a home do not think they’ll be able to do so, Kensington Mortgages has found.  

More than two thirds (68%) of self-employed individuals feel disadvantaged by their self-employed status when trying to get a mortgage.

Mark Arnold, chief executive of Kensington Mortgages, said: “Historically the self-employed community have struggled with many more barriers to getting a mortgage – for example having to provide statements from auditors, tax returns and numerous years’ worth of trading history.

“There is also a perception, as our research shows, that it is difficult to get on the property ladder if you are self-employed. However, this is valid, seeing that over a third of self-employed workers had been rejected by a high-street lender on application.”

Almost half (48%) of self-employed workers felt the perceived or actual difficulty they experienced during the mortgage process had put them off being self-employed.

Based on mortgage application data, self-employed mortgage borrowers are a safer bet than first-time buyers, according to Kensington’s Affordability Tracker (KAT).

The analysis for this year’s second quarter revealed that self-employed borrowers are more conservative than first-time buyers and typically borrow less than borrowers would permit.

The average self-employed mortgage customer in the UK took out a mortgage that was 28% less than the maximum possible sum that could be borrowed.

By contrast, the average first-time buyer borrowed 19% below the maximum possible sum that could have been loaned.

Arnold added: “Traditionally, the self-employed have been viewed as being more risky.

“Based on our KAT analysis we know they’re not. The typical building contractor, freelance management consultant, self-employed architect or graphic designer knows that it pays to be conservative.

“As a group, the self-employed tend to be more cautious, better savers and a smaller risk to a mortgage lender than being a fully employed person.

“We’ve found that your average self-employed individual has six months’ worth of savings, relative to full time employees, who tend to only have one month’s savings.

“More in control of their destiny, as they can’t be made redundant; they have more options to try and stay solvent.

“It shouldn’t be harder to get a self-employed mortgage, but you do need a good broker to point you in the right direction and talk you through the options.”


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