Self-employed working has a number of benefits. Not having to answer to a boss is one of them, while having greater control of the work you do is another. If you are self-employed and reading this article, there’s a fair chance you will be able to add a few more benefits to that list.

But there have historically been some drawbacks to working for yourself. One of them has been difficulties in securing a mortgage.

The latest MBT Affordability Index however suggests that the gap between self-employed workers and traditional workers when securing mortgages has got very small indeed. The latest data shows that 73% of self-employed applicants are securing the mortgage they sought, compared to 75% of traditional workers.

That small gap has got us thinking – what has changed to enable more self-employed workers to get the kind of deal they are looking for? 

Here are five reasons we can think of here at Roots Mortgages.

1 – Better understanding

One of the biggest barriers to self-employed workers securing mortgages historically was a level of ignorance on the part of lenders. 

A poor understanding of how self-employed workers made their money, and a lack of knowledge regarding practices and the level of stability self-employed work can offer has prevented many workers securing the kind of mortgage they would have liked over the years.

A big factor here was proving affordability. Lenders were historically too reliant on certain ways of proving affordability, and all too often self-employed workers found it difficult to do this.

Thankfully, things have come a long way, with more and more lenders having a better understanding of how self-employment actually works. 

2 – More lenders looking to support self-employed workers

There was a time when self-employed workers were not given much time by some lenders, many of whom will have missed opportunities to provide for this type of worker.

But there has been a change in this regard, with more lenders making a greater effort to cater for self-employed workers through specific initiatives and greater flexibility.

As well as traditional big lenders being more willing to enter discussions with self-employed workers, new players have entered the market and catered to this group as well.

An example is Vida Homeloans, who recently made a series of changes to their lending criteria to make life easier for contractors to secure a mortgage deal. 

3 – Changes to LTV 

LTV is an acronym you will come across regularly when seeking a mortgage, and stands for Loan To Value. This means the size of the loan that a lender is willing to offer to an applicant in relation to the overall value of a property. The higher the percentage of the LTV on offer, the lower the initial deposit needs to be, and the easier it is to secure a mortgage deal.

Unfortunately, contractors and freelancers have long faced relatively low LTV offerings from lenders. 75% has been a common figure that contractors and freelancers might hear when enquiring about LTV. But that means a large deposit would need to be put together, which has inhibited some potential buyers’ ability to move forward with their plans.

Thankfully there has been some movement in this area too, with some major lenders extending their LTV offer for self-employed workers. An example is Beverley Building Society, who has recently extended their maximum LTV to 80%

Hopefully more and more lenders will follow suit and make things easier for self-employed workers when it comes to LTV.

4 – Meeting demand

The fact of the matter is that mortgage lenders need to make money themselves. They are businesses with goals and targets, and when there’s a big potential group to tap into, such as the self-employed, it would be ill-advised to rule out making changes that could help a lender cater for them.

What’s more, the fact of the matter is that self-employed workers are resilient and determined. When they want to get on the property ladder, the vast majority will dig their heels in and try their utmost to get where they want to be. 

There is currently very high demand for mortgages, while UK movers are confident of securing a mortgage despite particular challenges such as the Bank of England’s base rate rise and the cost of living crisis.

Self-employed workers will inevitably be contributing to this. So in this context, it makes sense for lenders to do what they can to cater to all-comers, regardless of the way in which they work. 

5 – More experienced brokers

The historic issues faced by self-employed workers presented an opportunity for businesses to help offer support, guidance and answers to the challenges. 

We at Roots Mortgages firmly class ourselves in that group, having helped countless contractors and freelancers to secure the kind of mortgage deal they dream of. Our expertise has been built over time, and statistics such as those included in the latest MBT Affordability Index can be interpreted as indicative of a greater level of effectiveness and success in the work we do. 

If you are a self-employed worker keen to secure a home of your own, then using a mortgage broker can put you on the right path. Don’t think of brokers as a luxury you can’t afford to have. The fact of the matter is that brokers are the perfect accomplice to finding that ideal self-employed mortgage.