12% of self-employed workers have been turned down for first-time mortgages or remortgages, despite often earning more than in their previous full-time employed job, according to new research commissioned by the Nottingham Building Society.
The Nottingham’s study highlights how it is not down to having a lower income – 48% of the self-employed workers questioned earned about the same or more than in their previous job. Around 26% said they were earning more and the overwhelming majority had previously been in full-time employment.
The lender cited the Financial Conduct Authority’s Responsible Lending Review into the workings of the mortgage market in May, which 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% say there should be more mortgage choice for the self-employed and 23% expect applications from the self-employed to rise this year. Around 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, said: “Self-employment is growing rapidly and being your own boss should not mean you cannot successfully apply for a mortgage.
“Our study shows self-employment can still be an issue when applying for a mortgage with nearly one in eight being turned down despite many earning more than they were in full-time employment.
“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.”