One of the biggest borrowing barriers is the confidence to apply – Cleary

by: Alan Cleary, managing director of Precise Mortgages
  • 04/09/2018
  • 0
One of the biggest borrowing barriers is the confidence to apply – Cleary
Self-employed people need somewhere to live, just like those of us who run our own businesses on an employed basis, and their numbers are set to continue growing.


A survey of more than 1,000 businesses of all sizes and sectors by the British Chambers of Commerce found that around one in six plans to deal with the rise in the National Living Wage over the next three years by expanding the number of gig workers they use.

It’s a flexible way to manage the ebb and flow of business that firms have to service. It’s also cheaper.

However, it doesn’t always work so well in the favour of the gig workers themselves.

While many seem to value their own flexible hours, we’ve seen growing dissatisfaction with other aspects of being self-employed in this way.

Nowhere has that been so clear as during several court cases involving employees of gig economy firms claiming the right to be treated as employed workers rather than as self-employed.

This isn’t just about holiday and sick pay though.

The knock-on effects of being self-employed are many, not least the fact that it can be harder for those not in the PAYE system to secure a mortgage in the early days of self-employment.


Bring self-employed in PAYE

It was therefore interesting to see the latest bid to adapt our economy to the growing number of self-employed workers which came from the Office of Tax Simplification (OTS) this summer.

In a discussion paper, it recommended the Treasury require firms that operate largely by hiring self-employed gig workers to pay wages after tax.

This retained tax would then be paid directly to HMRC.

If adopted, it would effectively shift a whole generation of gig workers out of self-assessment and back into PAYE.

While the OTS said its aim is to collect more tax, the suggestion highlights just how significant a part of our working population those in self-employment have now become.

This contingent is formed not just of gig workers, but includes the millions of small and medium-sized businesses that form the backbone of the British economy.

Particularly during a time when large companies are signalling that no deal on Brexit could result in them taking jobs out of the UK, we must ensure they get a fair deal on basic rights to work and live.


Confidence to apply

So it’s worrying that so many consumers still perceive it to be so hard to secure a mortgage as a self-employed worker or business owner.

The reality is that over the past three years or so, it has got considerably easier.

There are lenders that will accept one year of fully signed off accounts as proof of income – it’s no longer a write-off if you’ve been self-employed for fewer than three years.

Affordability may not be so straight forward to evidence as PAYE, but it’s far from difficult, especially for lenders with underwriters who specialise in this type of affordability assessment.

But there’s clearly still a bit of a disconnect. One of the biggest barriers to getting accepted for a mortgage today has strangely become being confident enough to apply.

Brokers are invaluable in situations such as this – they have the power and access to lenders who can say “let’s figure out how.”




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