Over a quarter of self-employed workers believe they have been turned down for a mortgage because of factors linked to their employment status, new research from Afin Bank has found.
In fact three quarters (75%) of workers said they were either currently thinking about or would consider switching to salary-based employment to overcome the challenges of getting a mortgage.
Afin pointed to data showing that the number of people working for themselves is continuing to grow following a decline from 2020 to 2021 during the peak of Covid, with almost 4.4 million self-employed workers in the UK at the end of Q2 this year.
Afin's survey of 500 self-employed workers across the UK revealed that 38% believe their self-employed status had stopped them purchasing a new home.
23% said their unpredictable earnings or fluctuating income had been a barrier to getting a mortgage, while 13% pointed to insufficient proof of earnings or not enough years of accounts and 13% cited insufficient credit history.
9% of respondents believe they had been turned down for a mortgage because the lender would not accept multiple income streams.
Even among those self-employed workers that have a home loan, nearly a third (30%) say the process had been difficult, but they had eventually secured a mortgage. These struggles led to more than eight out of ten (86%) feeling they are an underserved community when it comes to banking, mortgages and financial services in the UK.
Afin Bank says its research shows 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 Covid.
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.”
