Posted on Thursday, December 13, 2018
The past decade has seen a huge expansion in people working freelance. Yet more than seven out of ten self-employed people feel discriminated against when applying for a home loan, research has shown. Another 20% also believe they would be refused a mortgage because of their employment status.
The figures come from research by The Mortgage Lender, a company specialising in loans to the self-employed and those with a less conventional credit history. Peter Beaumont, its deputy chief executive, said: “It’s time the mortgage industry woke up to the fact the world is changing. The growth in self-employment since the financial crash has been one of the defining characteristics of the UK’s recovery.”
According to the Office for National Statistics. 4.7 million of us are now self-employed, which equates to more than 15% of the UK working population.
Says Peter Beaumont: “For such a large segment of the home-owning population to feel they will be discriminated against when they apply for a mortgage is shocking and unfair. As a sector we’ve quite happily lent to married employed people when statistics show at least half of those couples are going to split up.“
In addition, 45% of self-employed mortgage applicants found it difficult to provide the information required by their lender and 26% of self-employed homeowners said they would move if the process was as easy for them as for people in employment.
Freelancers looking for a mortgage should not despair, however. People with a decent history of earnings and efficient record keeping can still get a good offer.
But without payslips or employer references to fall back on, applicants will need to provide accounts, going back two years if possible. That said, products are available for people who have only been freelance for a year.
Speaking to The Guardian Charles McDowell of Aldermore Bank said: “Ultimately, when assessing a self-employed mortgage applicant, a lender needs to make a judgment on two areas: How much is this applicant earning? And how confident are we they will sustain that level of earnings?”
Lenders will also want to go through your outgoings carefully, so it’s advisable to avoid over-spending on luxury items in the months leading up to your application.
Read more about this story in the Mortgage Introducer and find out more about mortgages for freelancers in The Guardian.