Report warns of self-employed homeownership ambitions

38% of self-employed borrowers make “worrying lifestyle changes and professional sacrifices” to get on property ladder.

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Two in five (38%) self-employed borrowers are making “worrying lifestyle changes and professional sacrifices” just to get onto the property ladder, according to new research from online mortgage broker Trussle.

Using insight from lenders and 2,002 self-employed mortgage applicants, the report reveals how challenging the journey to homeownership is for the UK’s 4.85 million self-employed workers.

Compared to permanently employed applicants, the self-employed are said to be required to go through extensive affordability assessments, provide further documentation and can face extra costs during the mortgage process.

As a result, more than one in eight (13%) self-employed borrowers have seriously considered abandoning homeownership ambitions.

Additionally, nearly a tenth (9%) of applicants have reconsidered their self-employment status altogether.

A further 18% of self-employed borrowers, aged between 25 and 34, were found to put off having children to focus getting on the ladder.

The report also found that:

  • 8% take on extra work to prove their income on paper for lenders
  • 7% have been put off moving despite their existing property ‘no longer being adequate’
  • 4% felt the need to move back in with friends and family

Trussle’s Review also found that nearly three quarters (71%) of the UK’s self-employed population believe their employment status made it more difficult to secure a mortgage.

Trussle is calling for a collaborative effort from the industry and the government to better support the self-employed.

Suggestions include integrating Open Banking to help those with multiple income streams, becoming more flexible with tax reporting periods, and assessing self-employed mortgage applicants on their current, and not historic, income.

Ishaan Malhi, CEO and founder of Trussle, commented: “Considering the average income for the self-employed is higher than those in permanent employment, there’s no reason why the journey to home ownership should be any more difficult for those who are self-employed.

“It’s concerning that many self-employed people feel pressured to make significant personal sacrifices to get on the property ladder.”

Malhi added: “No one should feel they need to choose between having children and home ownership. Nor should anyone feel forced to change their employment status just to make the mortgage application smoother.

“This needs to change. We’re calling on the industry and the government to work more cohesively to make changes for the better. As part of this commitment, we’re in the process of developing flexible products designed to suit the needs of the self-employed.”

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