Solutions to help self-employed mortgage applicants are being sought after a study discovered they are twice as likely to receive rejections from lenders.
Nearly a quarter of self-employed individuals have had their mortgage application denied in the past compared to 12% of employed workers, the Exploring Adverse Credit report from The Mortgage Lender has revealed.
Self-employed applicants are often treated with stricter affordability assessments to those who are employed, This is because their incomes are considered to be more irregular or complex and are therefore viewed as riskier to lenders.
The survey found, of those who have ever tried to get a mortgage, 19% of self-employed applicants have had mixed results, compared to only 11% of employed individuals who said the same.
Now the Mortgage Lender is calling for a solution to the problem. Indeed, it said there were around 4.2 million self-employed people in the UK – a figure which has been steadily rising since the early 2000s.
The Mortgage Lender said, with a growing number of people becoming self-employed, lenders must adapt and be open to offering mortgages to those with more complex incomes.
How can self-employed workers boost their chances of getting a mortgage?
If you are self-employed and worried you may not be able to take out a mortgage, the message is not to despair. Whilst it is certainly more challenging to get a loan, it’s not impossible.
Indeed, there are several ways you can improve your chances of getting a mortgage.
Peter Beaumont, CEO at The Mortgage Lender explained: “Fortunately, there are steps the self-employed can take to make themselves more attractive to lenders, like increasing their credit score, or saving for a bigger deposit to bring down their loan-to-value ratio.
“At the same time, however, the onus must fall on lenders to be more open to working with these enterprising individuals. We are proud to offer a competitively priced product range that caters to those with complex incomes.”
