According to a new survey by Foundation Home Loans, close to two-thirds of self-employed workers (60 per cent) say that their employment status means that mortgage lenders are unwilling to deal with them.
The survey showed that 59 per cent said being self-employed meant that the mortgage application process took longer, while 51 per cent said they faced a restricted selection of lenders. Due to this, just 39 per cent of self-employed respondents felt that now was a good time for homeownership, a figure that rose to 47 per cent among respondents in full-time employment.
A potential issue highlighted by the survey, however, is that the perception that getting a mortgage is more difficult for self-employed people may be preventing many from applying. According to the research, just 14 per cent of self-employed respondents said that they had been declined a mortgage due to being freelancers.
Respondents were also invited to say how they would like applications to be considered by lenders. Overall, self-employed borrowers said they would like mortgage lenders to take a full account of all of their income, to factor in the amount of time they’ve been self-employed, to consider cases individually and to be more flexible.
When it came to arranging a mortgage, self-employed borrowers were more likely than employed workers to engage an IFA or mortgage adviser, with 44 per cent of freelancers engaging them in comparison to 31 per cent of employed counterparts.
The survey also assessed the impact of the COVID-19 pandemic on self-employed finances. Encouragingly, close to three-quarters of self-employed workers reported experiencing no negative financial impacts and were three times less likely than employed people to have fallen behind on loan or credit card payments within the past 12 months. 13 per cent of self-employed workers surveyed reported taking a government grant or loan during the pandemic.
However, the pandemic has seemingly taken a bigger impact on the credit scores of self-employed people, with freelancers more likely to report having a low credit score or significant reduction in income over the past 12 months. Despite this consensus, though, 42 per cent of self-employed respondents said they had never done a credit check.
