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Self-employed still doubtful about chances for mortgages

New research from Pepper Money shows that over one in three of those classified as self-employed still believe that their working status could affect their chances of securing mortgages.

This research was based on a YouGov survey of 6,000 people, with the results revealing that 77% of self-employed people think that it makes lenders more reluctant to accept mortgage applications.

In response to these results, Pepper Money has stated that one of the biggest problems that the self-employed face during the application process is that most big lenders determine loan affordability on the basis of an applicant’s profits over the previous three-year period. That puts self-employed people at a disadvantage because many saw their profits fall temporarily during the pandemic in 2020.

Indeed, the same research shows that 20% have increased their profit margins by more than 10% during the past 12 months, but that does not help them in meeting the current affordability criteria.

Speaking to Mortgage Strategy, Paul Adams from Pepper Money said:

“The self-employed play a vital role in the country’s economy and the respondents to the survey are largely correct in that it can sometimes be more difficult to secure a mortgage as a self-employed person.”

He then went on to add that this unfair situation did not need to remain the case for people in that position.

There are more specialist lenders on the market that mortgage advisors with the CeMAP qualification can locate for self-employed people, showing again why advisors need to promote their services as widely as possible.

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