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The rapid growth of self-employment has been a noticeable feature in the make-up of the UK workforce in recent years. The number of individuals working for themselves has increased up from 3.2 million in 2000, with more than 5 million people now choosing to be their own boss (15% of the entire workforce).
Yet 36% of self-employed people have decided against applying for a mortgage or remortgage in the past five years because of the fear of their application being rejected. Perceived obstacles to gaining a mortgage included a lack of recent tax returns, irregular or insufficient income, and the mortgage request being too complicated.
With such a large number choosing to step away from the traditional 9-5, lenders are seen to be disenfranchising a large chunk of the market. But this isn’t necessarily the case. Although underwriting attitudes towards the self-employed may differ from lender to lender - some may have restrictive policies to adhere to while others may be more open to flexibility - many have started to re-consider the level of risk self-employed workers pose, opening their doors to borrowers with diverse incomes.
How are lenders doing this?
By considering the applicant individually.
At Newbury Building Society, for example, we do not credit score and all our mortgages are individually underwritten so each case is considered on its own merit; we dismiss the ‘computer says no’ mentality and focus on the person and their unique situation.
In addition, we consider net profit on an individual basis as we want to understand the business and the prospective borrower as well as show affordability into the future.
So, to find a mortgage that works for you when you work yourself a three-pronged approach is needed; firstly: reject rejection, secondly: find a lender who is willing to put the effort in, and thirdly, never assume it’s impossible to get a mortgage if you’re self-employed – it's not.
We can call you back to arrange an appointment. Our mortgage appointments are available by video call or by phone.
*all figures and data correct as of March 2021
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.