The mortgage market isn’t for contractors

Pete Thomson

October 24, 2016

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Pete Thomson is sales and marketing director of The Mortgage Lender

Have you ever wondered at what point something ceases to be niche and becomes mainstream? Or when just serving the “mainstream” means you’re losing touch with the way the market is moving?

I ask because despite more flexible employment options, like freelancing and contract work, growing in popularity high street lenders seem to have limited appetite to adapt their lending criteria to help more onto and up the property ladder.

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The increase in remote working and employers wanting more flexible workforce options has led to many who hadn’t considered becoming contract workers before taking the leap.

According to a study by software company, Intuit, there will be 60 million freelancers, contract workers and temps in the US by 2020, that’s more than 40% of the workforce, and there is every reason to think the UK will follow the same trend.

Earlier this year, Kingston University estimated the UK freelance workforce had already hit 1.91 million: an increase of 36% on 2008. In fact, one of the fastest growing demographics in this sector of the workforce is the working mum, with one in seven freelancers being a female parent.

Yet, in spite of this clear move towards more flexible working practices, high street lenders seem to have little interest in moving with them. One of the things we heard time-and-time again when we started to research the market for The Mortgage Lender was that there were pockets of the market that had all but given up trying for a mortgage – two frequently referred to were freelancers and contract workers.

It’s a market that should not be ignored, which is why we developed products specifically for the changing needs of UK workers.

The most important factor when looking at contractor workers is for them to demonstrate continuity of income – pre and post application, and not necessarily with the same employer.   And it’s then for them to provide the documentary evidence of income through payslips and bank statements.

These are simple and eminently sensible steps we work from to make a lending decision – it shouldn’t be about excluding such an important group of workers, or making them jump through an increasingly difficult series of hoops.

When and how we work has changed a lot over the last 10 years or so, and now how we employ or are employed is moving on too.

Being a contract worker is no longer considered to be a niche situation, except when it comes to mortgage lending.  If we want to encourage more back to the housing market, lenders need to be flexible in their approach and avoid ruling out home ownership for a growing part of the workforce.

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  • Super Contractors

    Interesting article to read. We do see more lenders coming on board in recent times for contractors. Some big name lenders, such as Halifax, can loan to contractors based on their day rate. Using a contractor mortgage broker that has the specialist knowledge can help point freelancers and contract workers in the right direction.

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