A recent study has highlighted that people who are self-employed struggle to obtain a mortgage.
Almost one in eight self-employed people are rejected for a mortgage, even though they may earn more now than they did previously as a full time employee.
The survey, conducted by the Nottingham Building Society, revealed that 12% of people who are self-employed have been rejected when applying for either a first mortgage or re-mortgage. The study has highlighted the problems experienced by those who don’t work full time, with many coming unstuck when they try to prove their income and pass the affordability tests.
According to the survey, 26% of self-employed respondents earned the same or more than they did previously, but many still experienced difficulty obtaining a mortgage. Most of the respondents were employed on a full time basis prior to becoming self-employed.
According to the Responsible Lending Review, conducted by the Financial Conduct Authority in May this year, the new affordability checks were not preventing lenders from providing mortgages to self-employed borrowers, while the volume of loans had remained stable.
However, mortgage experts believe that more needs to be done to help self-employed borrowers, with 86% of mortgage brokers saying that more choice is required for the self-employed. Furthermore, almost a quarter of brokers anticipate that the number of applications submitted by self-employed workers will rise during the rest of the year.
Mortgage advisers have CeMAP training so that they have knowledge of borrowers with a variety of circumstances, which may affect their ability to obtain a mortgage.
