Self-employed fear mortgage applications

Almost three quarters (71%) of self-employed professionals believe it is harder for them to get a mortgage application accepted than full-time employed applicants.

That’s according to a recent survey which claims that 22% of respondents feel victimised for being self-employed when applying for mortgages.

The self-employed population in the UK has now reached 15% of the nation’s workforce, with 5.5 million self-employed professionals anticipated by 2022.

Dilpreet Bhagrath, mortgage expert at Trussle, which ran the survey, admits that “determining affordability” tends to be considerably “more convoluted for the self-employed”.

“Most lenders require at least two years of certified accounts and SA302s, proof of your deposit or last mortgage statement, your latest three bank statements, proof of address and identification,” added Bhagrath.

“Some self-employed workers, like contractors and freelancers, are assessed purely on their day rate, but others are judged on the average of their past two years of earnings, regardless of what they earn at the time they apply for a mortgage.”

Inconsistent lending criteria can make it harder for self-employed professionals to pass affordability tests. The survey found that just 5% believed their financial assessments during the mortgage application process to be “fair”.

A third (33%) of self-employed borrowers also stated that obtaining the information required by specific mortgage lenders for their application was “challenging”.

“To avoid any issues that could delay or prevent you from getting your loan approved, make sure your details and accounts are kept up to date and in order,” added Bhagrath.

“Having separate business and personal bank accounts will also help to keep track of any spending, expenses and income, and to align your accounts properly during the application process.”

At TaxAssist Accountants Macclesfield we can work with you to prepare your accounts from whatever bookkeeping records you may have. Whether they are computerised, spreadsheets, cash books or simply a bag of receipts.

We can also advise you on how best to improve the efficiency of your record keeping procedures, ensuring that your self-employed income is adequately accounted for in the eyes of mortgage lenders.

For a free initial consultation on your self-employment and subsequent aspirations to apply for a mortgage, call us today on 01625 838242 and we’ll put you firmly in the picture.

Alternatively, you can drop us a line using our online enquiry form and our professional, friendly team will get back to you as soon as possible.

Date published 8 Oct 2019 | Last updated 25 Sep 2020