Research from Nottingham Building Society found that 12% of self-employed borrowers have been turned down for home loans, either as first time buyers or remortgage customers.
The research showed 48% of respondents earned the same or more than their previous employed job, highlighting that self-employed people are not being refused loans due to their perceived lower income.
Andrew Montlake, director of Coreco, said the self-employed market had improved vastly since the credit crunch but there is always room for improvement.
“There needs to be more lenders who understand the self-employed and how they are paid. Some lenders will look at customer’s accounts while other will look at their profit. It’s about finding the right broker who understands which lender would be best suited to the customer.”
While consistency among lenders remains an issue, the research found that 86% of brokers think there needs to be more choice for borrowers who don’t meet the traditional high street borrower criteria.
Montlake said there is still a way to go until self-employed borrowers have a variety of lenders available to them but he is optimistic for the future.
“There are new lenders who actually want to understand the self-employed market and accommodate them. It is about having the right trained underwriters and lenders tweaking their policies to accommodate this market.”
The Nottingham’s study found that 23% of brokers expect applications from self-employed borrowers to rise this year while 33% of brokers said they have already seen a rise in the last 12 months.
