According to a study by Ipswich Building Society, self-employment in the UK is at it’s highest point to date. However, with an increasing number of us taking the leap into self-employment/freelance work it seems that many have big concerns about how this affects mortgage eligibility:
- 77% of self employed / freelancers are concerned about not being able to shop around for a mortgage
- 61% feel that banks & building societies do not understand their financial position
- 45% believe that mortgage providers do not want them as mortgage customers
What has caused the frustrations with high street lenders?
There has been a growing trend in high street lenders turning away certain groups of ‘mortgage misfits’. With increasing reports of borrowers being turned down based on these circumstances, it is understandable that those trying to run a business are having frustrations with the high street lenders.
Here are the most common categories currently identified as ‘mortgage misfits’:
- Individuals earning £25k or below
- Self-employed individuals / freelance workers
- Those with poor credit history
- Individuals who will be 65 before their mortgage ends
Details of these groups and some advice for those who fall into these categories can be seen in an recent post here.
What are the key concerns?
There is a surprising percentage of self-employed individuals that are concerned that they will need to go back to work and get a salaried job just to secure a mortgage. IBS have lined out some other key concerns in the graphic below:
Despite a great deal of these individuals being credit worthy and reliable, it seems that any instances of ‘unusual circumstances’such as self-employment are being flagged as a risk factor and overlooked by high street lenders. IBS is looking to capitalise on this potential oversight with the release of their latest ‘self-employed mortgage’ product.