Brokers and lenders urged to improve support for self-employed applicants
More than half of the UK’s small business owners believe their employment status is holding them back from buying property, new research from The Mortgage Lender (TML) has shown.
The findings revealed that 53% of self-employed business owners feel that being their own boss has negatively affected their chances of homeownership. Of those, 21% have considered abandoning the idea entirely, 17% fear they may never qualify for a mortgage, and 12% have postponed their plans due to unpredictable income.
The challenges faced by the self-employed when applying for a mortgage are varied. Some 21% cited confusion over which documents are required as the most difficult part of the process, while 19% said there is a lack of information tailored to self-employed applicants. A further 17% struggled to understand the process itself, and another 17% pointed to difficulties in finding a lender willing to consider their application.
Application outcomes have also proven discouraging. More than two in five (43%) business partners said their mortgage applications had been partly or fully rejected.
To improve their prospects, many have had to consider significant personal and financial adjustments. Around 21% said they had considered changing jobs to earn more, while 17% looked at taking on extra work. Others reduced personal spending, with 14% cutting back on social activities and 15% cancelling subscriptions. Additionally, 20% said they had thought about relying on a partner’s income to qualify for a loan.
Separate research from specialist mortgage lender Together also highlights the growing toll that these obstacles are taking. Its recent study of over 2,000 self-employed individuals found that many are making major sacrifices: delaying major life events — such as marriage, starting a family, or business expansion — in order to focus on homeownership. Respondents also reported giving up on travel, social engagements, and further education to make home buying financially viable.
“It’s clear that small business owners need more support from lenders and brokers in successfully progressing through the mortgage application process,” said Chris Kirby (pictured), head of field sales at Shawbrook Retail Mortgages.
“Lenders and brokers must work together to help small business owners overcome the perceived barriers to homeownership that they are encountering, as there are potential solutions available that these customers aren’t aware of, and this could enable them to move forward with their home buying plans without further delay or compromise.”
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