Research lists the reasons why a third of self-employed individuals have never applied for a mortgage
Latest research from The Mortgage Lender (TML) has revealed that around one in three, or 34% of self-employed individuals have never applied for a mortgage. The reason? For many, they assumed their application would be rejected because they are self-employed.
Three in 10, or 30%, said they have never applied for a mortgage because they did not think their mortgage application would be approved. In addition, 26% said they heard it was more challenging for self-employed individuals to secure a mortgage.
Other reasons why self-employed people have not applied for a mortgage in the past were the lack of saved deposit (36%), waiting for interest rates to come down (17%), and the perception that the process was too daunting (10%).
While 57% of self-employed individuals have applied for a mortgage and been successful, 15% of this group said they were not successful on their first attempt. A further 4% revealed they applied in the past and have not yet been successful.
Of those who have been rejected for a mortgage previously, 38% said they were not approved due to volatile income, while 28% said the lender they applied through calculated that they would not be able to make the repayments.
Around 27% said they did not have the necessary documentation to prove their income, 11% said their mortgage rejection was based on missed or late payments, another 11% said they had a default or a CCJ in the past six years, while 5% were rejected because they were not registered to vote on the electoral roll.
“Self-employed work is becoming an increasingly popular route, with around 4.24 million people reporting to be self-employed in July 2023,” commented Steve Griffiths (pictured), chief commercial officer at The Mortgage Lender. “However, it’s clear that some lenders, particularly on the high street, haven’t necessarily caught up with this trend and aren’t always equipped to deal with more complex incomes.
“It’s unfortunate that this is putting off so many self-employed workers from even applying when they could, in fact, be great candidates for a mortgage. Especially when there are specialist lenders who are well placed to support their property aspirations. Specialist lenders, like TML, will often offer greater flexibility and have more experience dealing with complex cases.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
