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Nearly half of self-employed think lenders need better understanding of complex cases

  • 05/12/2023
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Nearly half of self-employed think lenders need better understanding of complex cases
Around 40 per cent of self-employed individuals believe lenders need to be more understanding of those with complex incomes, lender research has shown.

According to research by The Mortgage Lender (TML), which surveyed over 1,000 self-employed individuals, found 38 per said having more specialist lenders in the market that are aimed at those with complex incomes would make the mortgage application process smoother.

Approximately 32 per cent said working with a broker that specialised in the self-employed would make the mortgage application process easier.

Over a third said being able to provide income evidence for a lesser period of time, like one to two years’ accounts as opposed to two to three years’ accounts, would improve the mortgage process.

More than a quarter said that a more streamlined approach to providing documents and evidence would be helpful.

Around 30 per cent said more government support would be welcome and nearly a quarter said bringing back self-certification mortgages or something similar would be helpful.

One in five said that more information on the mortgage application journey would be useful.


Making sense of the deal

Around 28 per cent said understanding the process of a mortgage application was the most difficult part, a quarter said finding a lender was most challenging and 18 per cent pointed to finding a broker who understood their circumstances.

Approximately 23 per cent said improving their credit score was a challenge, 16 per cent pointed to accountants preparing accounts, 14 per cent to getting the right forms from the HMC and 11 per cent said collating bank statements was challenging.

Almost half said raising a sufficient deposit was the most significant barrier to obtaining a mortgage.

Chris Kirby (pictured), head of key accounts and specialist distribution at TML, said: “Self-employed individuals have typically faced greater challenges when it comes to obtaining a mortgage compared to those who are employed.

“Having an irregular or complex income structure can often be viewed as a riskier investment to more traditional banks and lenders, therefore limiting the options available to the self-employed. But with 4.31m people who are self-employed in the UK sitting in this group, it’s no wonder that they want to see more specialism and understanding in the market to support their property goals.”

He continued: “Specialist lenders, like TML, will often take a more pragmatic approach when it comes to assessing a self-employed applicant’s income, therefore offering greater flexibility to those with more complex incomes.

“For example, where appropriate we’ll look at pre-tax profits to assess affordability, which can support self-employed people obtain the level of mortgage borrowing they want and deserve, rather than having to make compromises on, or delay, their plans.”

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