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self employed tools
Posted: 15th Nov 2017

Figures from the Office of National Statistics (ONS) reveal that there are more people in self employment today than ever before. In the past year alone, self employment increased by 88,000 to reach 4.85 million (equivalent to 15.1% of all people in work).

This trend shift is recognised as a driving force for British economic growth, with the ONS praising trends in this area as one of the "defining characteristics of the UK's economic recovery”.

While there is, in many ways, a greater sense of freedom associated with being your own boss, the struggles of getting a mortgage to buy a property if you’re self employed are well documented.

Self employed mortgage struggles
For those running their own business, as well as freelancers, contractors, professional partners, consultants, and those earning through commission based payments, it’s easy to feel locked out of the process when some lenders are seeking stacks of evidence showing regular income and outgoings - something that doesn’t always come hand in hand with these career paths. Also, some newly established self-employed individuals may feel that lenders will not take them seriously as it can be difficult to determine how income and affordability might look in the long run.

In taking a traditional approach to lending, lead by a checklist of mortgage affordability rules and regulations, self employed people are too often swept under the rug. In the application process, many of these individuals may be rendered as unsuitable borrowers on paper, when the reality of their situation paints a very different picture.

With the trend of self employment set to continue rising in the UK, it’s plain to see that as an industry, we need to do more to fully understand the financial position and situation of every individual on a case by case basis. And it is unlikely that an automated computerised lending assessment is capable of addressing all angles.

Shaking up the self employed mortgage application process
Of course responsible lending requires a foundation of evidence to show that an individual will be able to keep on top of their mortgage repayments, taking into consideration that interest rates may rise in the future. However, lenders should be taking the steps to adopt a dynamic approach that addresses each unique mortgage application at an individual level in order to meet this growing demand.

Some mortgage applications will present more challenges than others, however, all applicants should be treated fairly, regardless of their employment status, whether employed by a company, by themselves, or somewhere in between.

Your home may be repossessed if you do not keep up repayments on your mortgage.