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It’s not always easy for self-employed people to get a mortgage. Many lenders are reluctant to lend to people without the benefit of a PAYE income, but with the number of self-employed people rising year on year, lenders are now being encouraged to take mortgage applications from self-employed people more seriously.
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20% of Landlords are Self-Employed
Research carried out by the Tenancy Deposit Scheme has revealed that nearly 20% of landlords are self-employed. Self-employed entrepreneurs make a significant contribution to the UK economy, yet many lenders treat them as second class citizens. Figures from the Nottingham Building Society show that one in eight self-employed applicants are refused a mortgage, even though they often earn more than they did in full-time employment.
Lending Criteria Tighter
It used to be a lot easier for self-employed landlords to secure buy to let mortgage finance, but lending criteria have tightened and now many high street lenders are turning down self-employed landlords.
“Historically, the self-employed landlords have been a fairly marginal group and many lenders could safely ignore them,” says The Mortgage Broker.
“However, the rise of the ‘gig economy’ – people having temporary jobs, or doing separate pieces of work, each paid separately, rather than working for employers – is growing fast and will lead to changes in mortgage lending and the economy overall.”
The economy is evolving and lenders need to adapt their lending policies to suit.
