But another underserved sector of the working population as far as mortgages is concerned is the self-employed. They are penalised for all sorts of things like not having the same monthly income, those working on zero contract hours, being a freelancer or contractor. And if you are new to self-employment woe betide if you don’t have two or even three years of accounts to show.
Over 50 and self-employed? Watch out!
Putting it all together, anyone over the age of 50 who is self-employed may well find it doubly hard to obtain a mortgage. This is just so wrong. The mortgage industry should be addressing this and finding ways of helping a large segment of the population.
According to the Association of Independent Professionals and the Self-Employed (IPSE), there are nearly 4.1 million solo self-employed people in the UK and the average age is 48. However, almost half are over 50 with 27 per cent aged 50-59 and 21 per cent are 60+ equating to almost two million people.
What’s more, many of them are well paid, some are working part-time alongside pension income and can afford a mortgage, so why do so many lenders dismiss them?
We have customers who had almost given up hope of finding a mortgage just because of their age and self-employed status. But they shouldn’t have to trudge about in the hope of finding a broker and lender who understands their needs.
The market needs to be more flexible
What is required in the mortgage market is more flexibility, a can-do attitude and a desire to help underserved populations in order to provide finance for cases that may be considered ‘not average’.
Manual underwriting is key here because the lender needs to understand the borrower’s individual circumstances and consider all income. Many self-employed people have fluctuating income from different sources and there is nothing wrong with that. It is perfectly valid.
Another issue is that some lenders want to see two or three years’ worth of accounts. That can be tricky in today’s environment as many people lost income during the Covid lockdowns and have been rebuilding their businesses.
Record numbers were made redundant during Covid and many set up their own businesses or turned to freelance work so they may not have three years of accounts yet.
One year of accounts is perfectly acceptable for us and we also do not discriminate against those who took government help during the Covid pandemic via the Self-Employment Income Support Scheme (SEISS).
Being self-employed and aged 50-90+ should not be a barrier to mortgage finance. Many of our customers fit into this category and intermediaries are in a prime position to advise their clients that they can qualify for a mortgage.
With the new Consumer Duty rules coming up in July, it is even more imperative that all borrowers are presented with options that are right for their individual needs.
