Over a third (34%) of self-employed individuals have never applied for a mortgage, according to the latest research from The Mortgage Lender (TML).
The survey of over 1,000 sell-employed individuals found that 30% had never applied for one because they didn’t think they would be approved.
Other reasons why self-employed people have not applied for a mortgage in the past, 36% said it’s because they had not built up their deposit yet, while 17% said they’re waiting for interest rates to come down, making mortgage payments more affordable.
Some 10% said they find the process too daunting and 15% said their business is less than two years old and therefore they don’t have the necessary documentation to prove their income when applying.
While 57% of self-employed people have applied for a mortgage and been successful, 15% of this group said they were not successful on their first attempt. A further, 4% revealed they applied in the past and have not yet been successful.
Of those who have been rejected for a mortgage previously, 38% said they were not approved due to volatile income, while 28% said the lender they applied through calculated that they wouldn’t be able to make the repayments.
Of those surveyed, 27% said they did not have the necessary documentation to prove their income, 11% said their mortgage rejection was based on missed or late payments, and 11% said they had a default or a CCJ in the past six years. Another 5% were rejected because they were not registered to vote on the electoral role.
Commenting on the survey’s findings TML chief commercial officer Steve Griffiths said: “Self-employed work is becoming an increasingly popular route, with around 4.24 million people reporting to be self-employed in July 2023, however it’s clear that some lenders, particularly on the high street, haven’t necessarily caught up with this trend and aren’t always equipped to deal with more complex incomes.
“It’s unfortunate that this is putting off so many self-employed workers from even applying when they could in fact be great candidates for a mortgage. Especially when there are specialist lenders who are well placed to support their property aspirations”.
