A new survey from The Mortgage Lender has revealed that self-employed workers are almost twice as likely as other employees to have mortgage applications rejected. The survey comes amid growing calls to make the mortgage application process fairer for freelancers, who still often face stricter assessments than those in full-time employment.
The survey found that, while just 12 per cent of workers in regular employment who have applied for a mortgage have been rejected, that figure rises to 23 per cent among self-employed workers. Overall, 19 per cent of self-employed mortgage applicants reported mixed results, a figure that fell to just 11 per cent among employed workers.
Even in instances where the applicant had taken steps to better the chances of having their application accepted, such as by improving their credit score, self-employed workers still faced greater hurdles than their employed counterparts.
While 38 per cent of freelancers polled agreed that having a strong credit score had helped them gain access to better interest rates and loans, this figure was significantly higher (48 per cent) among employed workers.
While saying that there were steps that self-employed individuals could take to improve their chances of getting a mortgage, The Mortgage Lender’s CEO Peter Beaumont also conceded that lenders had a part to play in being more accommodating towards freelance applicants.
Beaumont said: “There are around 4.2 million self-employed people in the UK, and it is typical for that number to grow when coming out of a recession, or in this case a pandemic also. While it may offer those workers more freedom, the major drawback of self-employment is the perception of income inconsistency, and consequently a greater challenge when it comes to borrowing large sums of money.”
“Fortunately, there are steps the self-employed can take to make themselves more attractive to lenders, like increasing their credit score, or saving for a bigger deposit to bring down their loan-to-value ratio. At the same time, however, the onus must fall on lenders to be more open to working with these enterprising individuals. We are proud to offer a competitively priced product range that caters to those with complex incomes.”
