Almost one in eight (12%) of self-employed people have been rejected for a mortgage, according to research from the Nottingham Building Society.
This is despite often earning more than in their previous full-time employed job. The Nottingham’s study found that nearly half (48%) of the self-employed workers questioned earned about the same or more than in their previous job.
One in four (26%) said they were earning more and the overwhelming majority had previously been in full-time employment.
The Financial Conduct Authority’s Responsible Lending Review into the workings of the mortgage market, published in May, concluded there was no evidence that mortgage companies were being prevented from lending to self-employed borrowers by new affordability rules; and that the volume of loans had not fallen.
However, mortgage brokers believe lenders need to do more to support the self-employed. Research among brokers found 86% want more mortgage choice for the self-employed. Nearly a quarter (23%) expect applications from the self-employed to rise this year and 33% of brokers saw a rise in self-employed mortgage applications last year.
Latest Government data shows the number of self-employed people in the UK is rising – around 4.69 million currently work for themselves after an increase of 182,000 in the three months to March.
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.
“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.”
Nottingham’s research shows it’s not only mortgage lenders who turn down self-employed customers – around 14% of recently self-employed people have been rejected for credit cards and 10% for unsecured loans.
The goal of Nottingham Mortgage Services is to find the best mortgage deal for customers by offering a fee-free service that searches over 50 lenders.
