Three quarters (75%) of self-employed workers said they were either currently thinking about or would consider switching to salary-based employment to overcome the challenges of getting a mortgage, research from Afin Bank has found.
Over a quarter (26%) of workers said they have been turned down for a mortgage because of factors linked to their employment status.
In Afin’s survey of 500 self-employed workers across the UK, 38% said their self-employed status had stopped them purchasing a new home, while 23% said their unpredictable earnings or fluctuating income had been a barrier to getting a mortgage.
In addition, 13% cited insufficient proof of earnings or not enough years of accounts as barriers, while a further 13% of self-employed workers pointed to an insufficient credit history.
Even among those self-employed workers that have a home loan, nearly a third (30%) said the process had been difficult, but they had eventually secured a mortgage.
These struggles led to more than eight out of 10 (86%) of those surveyed by Afin Bank feeling they are an underserved community when it comes to banking, mortgages and financial services in the UK.
Afin Bank said its research revealed a worrying trend of lenders not keeping up with the shifting trends of self-employment in the UK, which has changed in part due to the impact of the pandemic.
James Briggs, intermediaries sales director at Afin Bank, said: “While a lot of lenders claim to serve the self-employed, our research shows that support is patchy and difficult, to the point that a majority would consider returning to a salary-paying role to make it easier to get a mortgage.
“The definition of self-employment is evolving because of changes in working practices since COVID or because of uncertainty in the employment market. We have seen an increase in people on contracts, freelancing or with portfolio jobs managing multiple income streams.
“We want to support as many self-employed people as possible, so we don’t use a tick box approach and instead work to understand their circumstances to provide them with suitable mortgages.”
