Four out of 10 first-time buyers (FTBs) gave up being self-employed to ensure they could secure their mortgage repayments, Aldermore’s latest First Time Buyer Index has revealed.
The research found that FTBs who were self-employed were twice as likely to have been rejected for a mortgage by their bank, averaging at 39% compared with a 20% national average.
Nearly one in five (19%) prospective buyers who have been rejected for a mortgage were declined due to being self-employed, having irregular income or being a contract worker.
However, despite the struggles, self-employed first-time buyers are happy to have made it onto the housing ladder, with 88% stating they were happy to no longer be spending money on rent.
Jon Cooper, director of mortgages at Aldermore, said: “The homebuying process is difficult enough but even more so for those who don’t fit the standard profiles of some high street lenders.
“For those who are self-employed, contract workers or those with irregular income, getting a foot on to the property ladder often comes with more hurdles and setbacks, which can be disheartening.
“It’s concerning many first time buyers are giving up being self-employed in order to get on the property ladder.
“Entrepreneurship is key to our economy, and we shouldn’t penalise borrowers on this basis. It’s a positive that over recent years, we’ve seen more lenders willing to be more flexible.
“At Aldermore, our human underwriting approach allows us to dig into the detail of a borrower’s finances to better understand their financial situation and help them realise their homebuying dreams.”
