If you are self-employed and reading this, you know about the benefits your type of work brings. There’s plenty of them, and they add to what you do.
But every job has its downsides, and one of the major ones as a self-employed worker, contractor or freelancer, is not being able to easily demonstrate affordability when looking to buy a home.
New statistics have revealed that self-employed workers are finding it difficult to secure higher mortgage offerings at present.
And one industry expert has pointed to proving affordability as a possible reason for this.
What’s going on with self-employed mortgages at present?
Analysis from Mortgage Broker Tools has found that July saw the average maximum loan size being made available to self-employed applicants at £221,000.
This represents a 5% decrease on the month previous, and the lowest average maximum loan for self-employed workers since February 2021.
The drop is reflected in the lowest average loan size available. According to the analysis, this fell to £90,452 – a drop of 17% compared to June 2021.
Somewhat worryingly, only 67% of applications by self-employed applicants were considered affordable. It should be said however that this is only just below the rates seen across the wider market, with mortgage lenders ostensibly reluctant to approve as many applications in July 2021 than they have in months gone by.
This has led one industry expert to suggest that self-employed applicants may be struggling ‘to demonstrate the affordability they need’.
Tanya Toumadj is CEO of Mortgage Broker Tools, and said that this could well be a reason why the analysis is bringing the results it has.
Is it all doom and gloom?
When it comes to demonstrating affordability, this has long been a challenging aspect of mortgage applications for this kind of worker. This kind of analysis highlights the need to be vigilant and conscientious when making applications and ensuring all the required steps around affordability are taken.
This is why we recommend bringing in a contractor mortgage specialist to ensure your application and your affordability credentials are watertight. Any oversights or miscalculations could see you miss out on that dream mortgage due to the current trends and ways of thinking from lenders. Having a specialist by your side can help prevent this.
Additionally, it is important to remember that while things might not be as bright in the self-employed mortgage space at the present moment, more than two-thirds of applicants still receive an approval and pass affordability tests.
This means that getting the green light is certainly a possibility. The odds are in your favour, and it’s really just a case of getting the right support to get you over the line.