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
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
“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
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.