Self-employed people struggle to get a mortgage

Nearly one in eight self-employed people have been rejected for mortgages since working for themselves despite often earning more than in their previous full-time employed job, research finds.


Some 12 per cent of self-employed workers have been turned down for a first-time mortgage or remortgage, underling the problems of proving income and affordability for customers who are not full-time employees, according to a survey by the Nottingham Building Society.

The Nottingham’s study highlights how it is not down to having a lower income; nearly half (48 per cent) of the self-employed workers questioned earn about the same or more than in their previous job. Around 26 per cent say they are earning more and the overwhelming majority had previously been in full-time employment.

The Financial Conduct Authority’s Responsible Lending Review into the workings of the mortgage market in May concluded there was no evidence that mortgage companies were being prevented from lending to self-employed borrowers by new affordability rules and that the volume of loans had not fallen.

However, brokers believe lenders need to do more to support the self-employed; research among brokers finds 86 per cent say there should be more choice for the self-employed and nearly a quarter (23 per cent) expect applications from the self-employed to rise this year. Around 33 per cent of brokers saw a rise in self-employed mortgage applications last year.

Latest government data shows the number of self-employed people in the UK is rising; around 4.69 million currently work for themselves after an increase of 182,000 in the three months to March.

Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services (part of The Nottingham), says that self-employment is growing rapidly and being your own boss should not mean you cannot successfully apply for a mortgage.

‘Lenders are responding with new deals for self-employed customers being launched regularly so there are options available and demand. The key to ensuring that you do not struggle to be accepted is to get expert independent help and to explore the full range of options.’

Nottingham’s research shows it’s not only mortgage lenders who turn down self-employed customers; around 14 per cent of recently self-employed people have been rejected for credit cards and 10 per cent for unsecured loans.

Further reading on self-employed

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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