The world of work has been turned on its head in recent times. Terms like furlough and saying you were ‘WFH’ were rarely heard pre-pandemic – now they’re commonplace.
We will all have our own story about employment during the turbulent year or so since the first lockdown hit. But for some, the upheaval will have been huge. Some will have completely changed how they do things.
One such move would be going from traditional employment to self-employment. For plenty of those who do so, becoming a contractor or a freelancer will have been a long-considered shift that their current circumstances suddenly made feasible.
But every decision brings with it pros and cons. One potential downside for anybody moving into self-employed working is that they may feel this has derailed their house-buying plans.
However, there is evidence to suggest that there is plenty of interest in securing mortgage deals for newly self-employed workers based on just one year’s worth of accounts.
What’s brought this about?
Self-employment and the benefits it brings has long been appealing to workers across a host of industries. The idea of being your own boss and having more choice about the work you do has made contracting and freelancing and increasingly popular way for people to earn a living.
The pandemic meant that many people were faced with a period of insecurity regarding their regular employment, or even had to face the reality of losing their job completely. This kind of circumstance might have been the impetus behind making the leap into self-employment.
Though exciting, the need to stick with a general life plan which included buying a home will not have been lost on people changing to self-employment.
This has seemingly led to a new trend within the mortgage industry of late.
What trend is this?
According to the Knowledge Bank mortgage platform, the second-most searched term on its website in September was ‘self-employed one year’s accounts’.
Knowledge Bank provides brokers with the opportunity to access criteria and information from more than 250 mortgage lenders.
What does this say about self-employed mortgages at present?
It is evidence of a distinct trend around brokers seeking mortgage deals for self-employed workers, and being keen to work with lenders who are willing facilitate such a situation.
This builds on the recent trend which has seen some lenders change their criteria for applicants who applied for SEISS grants during the pandemic.
There has historically been a real stringency around providing mortgages to self-employed workers, and proof of income is often at the heart of this. Many self-employed workers struggle to prove affordability, meaning they miss out on potentially good mortgage deals.
But there seems to be a slight change in this. There is an increased optimism among mortgage brokers in securing mortgages from lenders that use common sense when it comes to proving affordability for self-employed workers.
Additionally, with the increase in demand, it seems reasonable to think that other lenders may be willing to loosen the shackles a little and start to engage with self-employed workers with only one year of accounts to prove their financial clout.
We can only hope this is the case. It could be the start of a shift that would benefit the self-employed when it comes to securing a mortgage that fits their requirements.