Since mortgage rules and regulations were tightened following the financial crisis, it’s become a lot harder for the self-employed to secure loans. Once upon a time, all the self-employed had to supply was a self-declaration of their income and a few supporting pieces of paper work. These days, however, lenders require at least two years’ worth of books and piles of associated documents. Even then, many are still reluctant to lend to those who work for themselves or do not lend as much as they would to an employed person on the same income.
Luckily for the self-employed, this may all be about to change. Mainstream lenders are being urged to supply loans to niche markets, meaning there may soon be more mortgages available for the self-employed.
More workers are becoming self-employed
In recent years, more and more people have given up salaried jobs to become their own boss. According to @ONS in the past year the number of “self-employed people increased by 103,000 to 4.80 million, 15.0% of all people in work.” This record level of self-employment has dramatically increased the market for self-employed mortgages and helped to encourage major lenders to ease the rules for those working for themselves. As the economy continues to change and evolve, it’s likely even more people will start working for themselves, something that should help to ensure lenders continue to develop products aimed at the self-employed in the future.
Smaller banks leading the way
Although major lenders have always provided some mortgages to the self-employed, it’s smaller challenger banks that have led the way in making self-employed mortgages mainstream. Taking advantage of this niche but growing market, these ambitious lenders have fast become the first port of call to self-employed house hunters looking to secure a loan.
The main reason behind this development is that smaller banks are generally able to respond more quickly to the changing market. Able to spot evolving trends, adopt the latest technology and capitalise on good customer service, these small but ambitious lenders have developed financial products for the modern market.
Big banks following suit
Following the example of smaller banks, larger lenders are now beginning to catch up and have started to offer a few more loan options to the self-employed. Although those who work for themselves will probably still have to jump through a few more hoops than workers with regular salaries, this should mean that the self-employed will finally find it that little bit easier to get their foot on the property ladder.
Getting expert advice
Whether you’re employed, self-employed or retired, the best way to ensure you get the right mortgage for your needs is to seek expert advice. Find out more by taking a look around our site or getting in touch with a member of our team.
Please be aware that by clicking on to the above links you are leaving the Perception Finance Limited website. Please note that Perception Finance Limited are not responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
Written by: Editorial Team