Self-employed forced to jump through more hoops to secure mortgage

Contractors face more obstacles than permanent employees when applying for a mortgage, according to a new survey of 250 self-employed workers.

The research, commissioned by Yorkshire Building Society-owned Accord Mortgages, found that one in five (22 per cent) self-employed workers believe the irregular way they earn their income makes it harder for them to secure a mortgage, compared to those employed full-time.

Close to a third (29 per cent) of the survey sample feel that financial service providers view them as a larger lending risk.

Those that had been in the contracting game for less than two years were the most anxious over receiving a mortgage approval. However, it was still a major concern for workers that had been self-employed for between three to ten years.

One in six respondents said they found the process of applying for a mortgage difficult, while just less than one in five felt that their work status made dealing with financial institutions more complicated.

Frustrating

To address contractors’ mortgage struggles, Accord Mortgages is now piloting a bespoke lending policy. The new process takes greater consideration of the way contractors receive their income, and currently involves five selected specialist broker firms, with the view of expanding to the full market during 2017.

David Robinson, Accord’s national intermediary sales manager, said it was true that contractors have to “jump through more hoops” than full-time staff to secure mortgage products, despite often having a higher earning potential than when they were a permanent employee.

“It must be frustrating to know they can comfortably make their mortgage repayments, yet some lenders still view them as a risk,” he commented.

More legwork

Accord works to recognise the intermediary’s relationship with their client and to work in partnership with them to ensure their clients’ needs are being met through competitive products and excellent service.

“There’s no denying that more legwork is involved at the front-end of the application process for contractor clients – for both the broker and lender,” added Luke Somerset, associate director at Niche Financial Group.

“It’s essential for lenders to have specialised underwriters who can take the time to fully understand a case to ensure a smooth process for all involved.”

By Joe White