New research finds UK self-employed workers are making huge sacrifices for home-ownership
The UK’s self-employed workers and freelancers are making huge personal and professional sacrifices just to achieve their home-ownership ambitions, new research has revealed.
Many of the country’ entrepreneurial wealth creators have put on hold important life plans such as marrying, having children or expanding their businesses – potentially hitting future earning potential – to get on, or step up the housing ladder.
Other major sacrifices have included abandoning further education, cutting out meeting friends for meals and travelling abroad, according to research published by Together.
The specialist mortgage lender said the UK’s 4.4 million self-employed – who have combined wealth of £82bn – were being “badly failed” by the current mortgage market, with many mainstream lenders often relying on computer-generated and automated decisions on whether to lend.
Their strict borrowing criteria consistently ignores the specific circumstances and characteristics of self-employed borrowers, Together said, while other potential borrowers suggested it was difficult to find the right mortgage product or lender to support their needs.
In a national survey of more than 2,000 self-employed or freelance workers the specialist lender found two in five (40%) whose mortgage applications were rejected said this was because they were self-employed, while nearly one in five (18%) said they’d found it hard to prove their self-employed income. Another 18% found their diverse income streams made life difficult when they wanted to buy property.
However, even those who have found the right finance to achieve their property ambitions have had to make sacrifices, with 15% holding off on starting a family, 12% delaying getting married and 19% saying they haven’t been able to invest in their business.
More than a third (37%) have shelved plans to travel, 28% refrained from socialising or eating out and 10% said they were no longer pursuing further education so that they could get the mortgage they wanted. A huge proportion (87%) believe they often miss out on competitive mortgage deals because of their employment status.
The survey results come as Together’s analysis of ONS data reveals that the UK’s growing army of self-employed are sitting on £82bn in average annual disposable income, with a hefty average deposit of £51,000 at an individual level.
But the mainstream mortgage process is failing to accommodate the unique needs of the self-employed. Nearly three quarters (73%) don’t think there are enough products on the market to meet their needs or situation. And almost a third (28%) who have applied for a mortgage in the past found it a challenge to actually find a lender who can support their application.
Ryan Etchells, chief commercial officer at Together said: “It’s frustrating to see that self-employed borrowers, even when they can access mortgages, are having to put on hold important life goals to achieve their home-owning ambitions.
“Across the mortgage market we are seeing an increasing average age for first time buyers and families facing cramped conditions because they can’t move out of their starter home after having their first children – but the situation is even worse for self-employed or freelance workers.
“They face further challenges because of the way the mainstream mortgage market works, where those who may be high earners but who’s income may be inconsistent are simply ignored, a situation we believe needs to change.
“With the Government gunning for growth, the inability for the self-employed to access the mortgages they’re looking for could be holding the wider economy back and stopping many from getting on the ladder at all.
“That’s why specialist lenders such as Together believe it’s crucial to support self-employed borrowers and other underserved sections of society.”