It’s no secret that getting onto the property ladder is becoming increasingly difficult across the board, but for self-employed workers, the outlook is even bleaker.
According to recent statistics, there are an estimated 4.4 million self-employed workers across the UK.
During the Covid-19 pandemic, the country saw a sharp increase in self-employed delivery drivers and online gig work, adding around 1.37 million gig economy workers from 2019 to the end of 2021. A study we conducted last year found that self-employed mortgage applicants are set to rise by 67% over the next five years – from £20.9bn in 2023 to £34.8bn.
Further research we have carried out has shown that the UK’s self-employed workforce is sitting on nearly £82bn of disposable income but, incredibly, four in five of them have struggled to get a mortgage. That sum could fund the average first-time buyer deposit 1.6 million times over.
The same is true of self-employed individuals seeking commercial loans, where access to finance is already a huge hurdle, hindering growth and success for those scaling a business.
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The income conundrum
We asked self-employed respondents why they were rejected, and many stated that being unable to prove a steady monthly income has limited their chances. The results are clear; the self-employed are being continually let down and the industry needs to do more.
These individuals often demonstrate the entrepreneurial spirit the UK desperately needs, and they shouldn’t have to face additional challenges when looking to achieve their property ambitions.
The issue often stems from lenders taking an automated ‘one-size-fits-all’ to applications. Self-employed borrowers often have fluctuating income levels, multiple sources of income, gaps in income, complex structures or are unable to provide the necessary evidence of income needed to meet the rigid criteria for a mortgage from mainstream lenders.
A broker who understands self-employed circumstances
How can brokers help? For 9% of those we surveyed who were rejected for a mortgage, not being able to talk with an adviser who could look to understand their circumstances was among the biggest challenges. Taking the time to educate yourself on the products available in the specialist market can help you stand out from the crowd. Being able to provide quality, informed advice is invaluable to customers who are otherwise under-served.
A rejection by the mainstream banks does not mean it is the end of the road; options are available, you just need to know where to find them, utilising resources available to you such as criteria sourcing platforms that enable you to source the right lenders day one, specialist lending webinars or forging a partnership with a specialist master broker.
The market is competitive and full of opportunities, and intermediaries willing to take the time to provide support on more complex self-employed applications will reap the rewards by staying ahead of their rivals.
