One in eight self-employed borrowers rejected for mortgage: Nottingham BS

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One in eight self-employed borrowers have been rejected for mortgages or remortgages, Nottingham Building Society has found.

A study found 12 per cent of self-employed workers have been turned down for first-time mortgages or remortgages, despite 26 per cent of those surveyed saying they were earning more now than they were when in full-time employment.

The Financial Conduct Authority’s Responsible Lending Review into the workings of the mortgage market in May concluded there was no evidence that mortgage companies were being prevented from lending to self-employed borrowers by new affordability rules and that the volume of loans had not fallen, the study says.

However, according to an online survey of mortgage brokers conducted in May, 86 per cent said that lenders need to do more to improve mortgage choice for the self-employed, while nearly a quarter (23 per cent) expect applications from the self-employed to rise this year.

Around 33 per cent of brokers saw a rise in self-employed mortgage applications last year.

Nottingham Mortgage Services senior mortgage broking manager Ian Gibbons says: “Self-employment is growing rapidly and being your own boss should not mean you cannot successfully apply for a mortgage.

“Our study shows self-employment can still be an issue when applying for a mortgage with nearly one in eight being turned down despite many earning more than they were in full-time employment.”

He says that new products for the self-employed are being launched regularly and that the key to ensuring that borrowers are accepted is ensuring they get expert advice.