Over half of contractors feel penalised when trying to take out a mortgage

As many self-employed workers know, trying to take out a mortgage can be even more difficult compared to if you worked a permanent role.

Latest findings have shown that as many as 59% of contractors feel penalised for being self-employed when trying to get a mortgage and worryingly, financial uncertainty due to the pandemic seems to be making it even more difficult.

New research compiled by the IPSE and CMME found that 20% of those who are not homeowners and are not planning to buy, said this was because they had used all their savings to get by during the pandemic.

Even those who are not planning on buying their own home for another five years are still concerned, with 63% saying they’re worried about what state the housing market will be in by then.

Other findings from this group show that:

• 75% are worried they won’t have the job security to get a mortgage.
• 60% have concerns they won’t be able to afford a mortgage.

Chloé Jepps, Head of Research at the Association of Independent Professionals and the Self-Employed (IPSE), commented, “Getting a mortgage has always been more of a challenge for freelancers, but in the pandemic – the financial impact of which has disproportionately hit the self-employed – it is more difficult than ever.

“In the context of the pandemic, a significant proportion of freelancers are not considering buying a home at all – either because of the sheer financial uncertainty, or because they have lost so much of their savings.

“With extreme financial anxiety across the self-employed sector, as well as widespread reports of lenders unfairly adding to the obstacles facing freelancers who want to get on the housing market, it’s clear the sector needs more support from government. Without intervention, there is a risk many thousands of freelancers will have to put their house-buying plans on ice for years to come – or even give up on the dream of home-owning altogether.”

Mike Coshott, CEO at CMME Mortgages for Independent Professionals, added, “With the difficulty facing self-employed professionals and freelancers as a result of the pandemic, getting a mortgage shouldn’t be an additional hurdle. CMME believes the way people choose to work should not limit their choices in life; Historically, this sector – which makes up some 15% of the UK’s workforce – has faced continued challenges when it comes to securing a mortgage. According to the research CMME has conducted in partnership with IPSE, 1 in 4 self-employed professionals have experienced difficulty getting a mortgage, as traditional lenders have struggled to assess their true borrowing power, often resulting in them lending less, offering a poor deal or simply saying no.

“Having spent the last 16 years working directly with banks and building societies to change the way they view people who choose to work independently, this research will be invaluable in furthering the solutions we have already developed for independent professionals. In doing so, we hope to continue our work in changing the risk appetite and lending criteria for the self-employed in order that this invaluable sector of society gain access to the mortgages they deserve.

“As 2021 unfolds, vaccines develop and the world looks to the future calm-after-the-storm, we hope that the self-employed sector will see more mortgage equality on the horizon.”

To find out more about contracting please contact Jessica on 01206 591 000 or email jessica.attwood@contractorumbrella.com.