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Self-employed customer still struggling to get a residential mortgage?

James Forth


James Forth - Group Head of Sales

Published 31.03.2023

The worst cost of living crisis in recent memory, the consumer price index still running at more than 10%1, house prices at near record levels – you can’t get away from all the articles telling us how much the UK economy’s struggling at the moment.

Dig a little bit deeper into the news though, and there are stories out there which I believe should give us cause for optimism.

According to the Office for National Statistics’ latest Public Sector Finances report2, the government recorded a surprise £5.4 billion surplus in January, largely thanks to a boost from the amount it receives from self-employed workers. While it’s not surprising for the Treasury to receive so much money early in the year as people rush to fill in their self-assessments, what was unusual was the £21.9 billion it received, the highest January figure since monthly records began in April 1999 and £5.5 billion more than it received in January 2022.

The unexpected windfall could be due to the increase in the number of people working for themselves again. The self-employed were one of the groups who were hit the hardest during the pandemic with numbers dropping by almost a million from a high of more than five million in late 2019. The latest figures show there are now 4.3 million in self-employment, the highest number since Q4 20203.

So with the numbers of self-employed people increasing, how easy is it for them to get a residential mortgage?

According to Mortgage Brokers Tool’s latest Affordability Index, many self-employed are struggling to get a mortgage as lenders are increasingly quizzing them about the impact inflation, the energy crisis, the pandemic and Brexit has had on their business. As a result, around 65% of self-employed applications were considered affordable at the end of 2022, the lowest level since the company began tracking numbers back in 20204.

Fortunately, as one of the UK’s leading specialist lenders, Precise Mortgages is on the side of self-employed workers. We know the challenges they face and recognise just how important they are to the country’s economy and the vital role they’ll play in helping it to recover.

Whether your customer is new to the growing ranks of those working for themselves or runs a long-established business, our range of residential mortgages is designed to support them, even those with adverse credit histories.

Here’s how we could help:

  • Self-employed with only one year’s tax calculation and HMRC Tax Year Overview or accounts considered.
  • We accept trading or financial year-end and can work on the latest year or an average, whichever is higher.
  • Changes in trading style during the last 12 months accepted.
  • Adverse credit considered, including defaults, CCJs, secured and unsecured arrears, as well as active and satisfied debt management plans.
  • Car allowance and 100% of pension contributions accepted as part of total annual income.
  • Limited companies, sole traders and partnerships accepted.

If you’d like to discuss any of our products, you can speak with your business development manager, call our dedicated support team on 0800 116 4385 or via Live Chat.

Sources:

1www.ons.gov.uk/economy/inflationandpriceindices

2www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/january2023

3www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/employeesandselfemployedbyindustryemp14

4w3.mortgagebrokertools.co.uk/mbt-index

 

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