A number of specialist mortgage providers have suspended lending amid ‘challenging conditions’, raising concerns that niche borrowers such as the self-employed could find it harder to get a home loan.
It can be hard to get a mortgage when you're self-employed, as without regular payslips it's difficult to convince lenders that you're a safe bet.
So, with options narrowing, could it be still easy to obtain a mortgage when you're self-employed? We talk to David Blake that? Mortgage Advisers to find out.
Lenders quitting the self-employed mortgage market
Secure Trust Bank announced earlier this year that it's consulting on stopping new mortgage lending until market conditions become 'more favourable'.
It pointed to increased competition in the market, with increased and much more lenders racing to offer lower rates, which has impacted its profit margins.
Secure Trust Bank normally offers deals to borrowers such as the self-employed or contractors.
Meanwhile Fleet Mortgages, which also offers deals to self-employed borrowers, has pulled its entire range, citing issues around funding.
The firm said inside a statement: 'We have recently completed lb400m of mortgage loans and among the world's largest asset managers.
'Due towards the launch of our services in December, this tranche of funding was filled much quicker than we initially anticipated.
'We have therefore needed to pull the current product range in the end wait for the next funding line to be made available.'
Can you still obtain a mortgage when you're self-employed?
So, with two specialist lenders withdrawing in the market, how easy could it be for self-employed borrowers to get a mortgage?
According to David Blake, a senior mortgage adviser at Which? Mortgage Advisers, do not be put off applying for a deal.
He told Which? Money: 'The statistics show more people are actually self-employed than ever before. Naturally, because this is a growing market, mortgage lenders have grown to be a lot more flexible when it comes to lending to people with this type of income.'
The number of self-employed workers increased from three.3 million in 2001 to 4.8 million in 2022 according to the Office for National Statistics – meaning self-employed people now constitute 15% of the working population.
David explains: 'These days, lenders will often have a common sense approach to lending. For those who have a good level of experience inside a certain industry, they’re more likely to simply accept self-employed income even if it's only been for a short period of time.'
Which lenders offer self-employed mortgages?
We analysed data from Moneyfacts to check on which lenders would consider self-employed applicants and their main criteria for lending.
We available at least 78 lenders – including major players like TSB, Santander and HSBC – that would consider a self-employed applicant as long as they provided between one and three years’ accounts.
David says: 'There has not been so much flexibility for self-employed individuals to obtain a mortgage. It shouldn't be anymore difficult than if you are employed.'
How to boost your self-employed mortgage chances
While the variety of self-employed mortgage borrowers are still healthy, there are some steps you can take to improve your odds of getting approved for a loan when you come to apply.
Use an accountant
If you're self-employed and applying for a home loan you'll normally need at least 2 yrs of accounts signed off with a certified or chartered accountant.
Prepare your SA302 forms
The SA302 form shows your annual tax calculations and many lenders will request the final three whenever you apply for a mortgage.
If you file your self-assessment taxes online you are able to print this off. With a paper taxes you will need to ask HMRC to send a copy if you don't already have one.
Save a larger deposit
As with any mortgage application, the larger your deposit, the easier it will likely be to secure a deal at a good rate.
Most lenders will want you to definitely have a deposit of 10-20%, but if you do not have a robust good reputation for accounts you might need a bigger deposit to convince them you're a safe bet.
