Self-employed mortgage applicants get raw deal

Nearly one in eight self-employed customers have had mortgage applications rejected, research by Nottingham Building Society has found.

The study found that 12% of self-employed workers have been turned down for first-time mortgages or remortgages.
The findings highlight the problems of proving income and affordability for customers who are not full-time employees, according to The Nottingham.

Despite their self-employed status, nearly half (48%) of respondents said they earned about the same or more than in their previous job, and 26% said they were earning more.

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.”

Nottingham’s research shows it’s not only mortgage lenders who turn down self-employed customers, around 14% of recently self-employed people have been rejected for credit cards and 10% for unsecured loans.

The Financial Conduct Authority’s Responsible Lending Review concluded there was no evidence mortgage companies were being prevented from lending to self-employed borrowers by new affordability rules and that the volume of loans had not fallen.

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Written by: Houseladder