That’s according to a new study from Pepper Money, which found that 77 per cent believe that being self-employed makes it more difficult to be approved for a mortgage.
Pepper noted that a particular challenge faced by would-be self-employed borrowers is the way that many mortgage lenders calculate affordability based on the average profits made by the borrower over the last three years.
However, the pandemic means that many self-employed people have seen much stronger profits in the last year than in the previous couple of years. Indeed, around a fifth of self-employed people said that their business has made over 10 per cent more profit in the last year than the two preceding years.
Self-employed need a specialist approach
Paul Adams (pictured), sales director at Pepper Money, said that it does not have to be the case that self-employed borrowers have issues in securing a mortgage, noting that some lenders have criteria and processes in place that support such borrowers.
He added: “It’s not just the self-employed who can benefit from this specialist approach. Our research found a quarter (25 per cent) of all workers earn variable income, either from overtime or bonuses and the ability to consider this additional income is often an important factor in helping them to achieve the mortgage they deserve.”
A previous study by United Trust Bank argued that self-employed borrowers were “marginalised” by mainstream lenders, while Accord has called for brokers and lenders to work together to get underwriters to approve applications from self-employed borrowers.