Self-employed workers have traditionally encountered difficulties in successfully applying for financial products and services. Mortgages in particular have been considered something of a ‘no go’ area for the self-employed, motivating many to abstain from applying altogether.
However, evidence suggests that mortgage lenders in the UK are not nearly as hesitant to work with the self-employed as previously thought.
As long as those concerned can comfortably afford the repayments and are in a strong financial position, they have just as much chance qualifying for a competitive mortgage deal as conventionally employed applicants.
Growing Demand, Relaxed Restrictions
According to recent figures released by the Office for National Statistics (ONS), the UK was home to more than 5 million self-employed workers at the end of last year. This equates to approximately 15% of the entire employed population and represents a huge spike from the 3.2 million self-employed workers recorded 20 years earlier.
Commenting on the shifting trends in the United Kingdom, Hodge Bank business development director, Emma Graham, told Yahoo Finance that self-employed status is no longer the big obstacle it used to be.
“I don’t think it [being self-employed] makes a big difference these days, it is just as easy to get a mortgage if you’re self-employed than if you were employed,” she said.
“Going back a generation ago it was quite tricky, some of the requirements were quite onerous, but self-employment is ever-growing and more popular,”
“The challenges can come if you are newly self-employed and have a limited history of your accounts, but an adviser will know exactly where you should go to get the best deal.”
Adjusting to the New Norm
The after-effects of the COVID-19 crisis are likely to be with us for some time, including home working becoming the ‘new norm’ for businesses. In addition, experts believe that the upward trend in self-employment and the pursuit of self-employment opportunities will only continue to accelerate over the coming years.
Traditionally, it has been assumed that self-employed status immediately raises a ‘red flag’ with lenders. In reality, qualifying for a mortgage as a self-employed worker is no more difficult than any ‘conventional’ case.
You simply need to ensure your finances are in order, get your accounts signed off by a certified accountant and produce enough evidence to support your application. In addition, broker support is considered essential for anyone looking to apply for a mortgage as a self-employed worker.
Across all age groups, the number of self-employed workers qualifying for mortgages is growing at record pace. In some instances, self-employed applicants with quantifiable long-term job security are actually being offered more than their conventionally employed counterparts.
Lenders are increasingly acknowledging the fact that self-employed doesn’t inherently mean ‘high-risk’. In a climate such as today’s, it can actually mean the exact opposite.
For more information on any of the above or to discuss self-employed mortgage applications in more detail, contact a member of the team at UK Property Finance today.