Lenders need greater understanding of complex cases”, says the self-employed

Wednesday, December 6, 2023

40% of self-employed individuals think lenders need to be more understanding when it comes to those with complex incomes, according to research from The Mortgage Lender.

Delving into the sentiments of self-employed people and the mortgage market, including what would make the process more straightforward for them, TML found that 38% of self-employed individuals think that having more specialist lenders in the market that cater to those with more complex incomes would make the mortgage application process easier for their cohort. 32% said working with a broker that has a specialism for self-employed mortgages would also make the process easier for them to help navigate what is required.

Self-employed applicants can be viewed as riskier applicants to lenders, mainly because they are considered to have more irregular or complex incomes, making it trickier to obtain a mortgage.

TML asked more than 1,000 self-employed individuals what would make the mortgage application process easier for them. 34% said having to provide evidence of income for less time, so 1-2 years’ worth of accounts rather than 2-3 years, would make it easier, while 27% said a more streamlined approach to providing documents and evidence would help them.

30% said greater government support would make the mortgage application process easier, and 24% said bringing back 'self-certification' mortgages or a similar type of mortgage would help. There is clearly a need for more readily available information on the topic, with 20% stating this would be of help.

Each of these asks are understandable when looking at what self-employed individuals find to be the most difficult parts of the mortgage application process. 28% said understanding the process of a mortgage application was the most difficult part, while 25% said finding a lender that would lend to them was the most challenging. 18% said finding a broker that understood their circumstances was the trickiest.

Improving finances and getting all the necessary documentation in order also came up as a barrier for self-employed individuals. 23% said improving their credit score was the most difficult. Having an accountant prepare two or more years of certified accounts (16%), providing an SA302 form or a tax year overview from HMRC (14%), and collating bank statements (11%) are also significant factors in hindering the mortgage application process. With concerns over affordability and the cost of living, nearly half (46%) raised saving for a deposit as being the most challenging part of obtaining a mortgage.

Chris Kirby, Head of Key Accounts & Specialist Distribution, at TML commented: “Self-employed individuals have typically faced greater challenges when it comes to obtaining a mortgage compared to those who are employed. Having an irregular or complex income structure can often be viewed as a riskier investment to more traditional banks and lenders, therefore limiting the options available to the self-employed. But with 4.31million people who are self-employed in the UK[1] sitting in this group, it’s no wonder that they want to see more specialism and understanding in the market to support their property goals.

“Specialist lenders, like TML, will often take a more pragmatic approach when it comes to assessing a self-employed applicant’s income, therefore offering greater flexibility to those with more complex incomes. For example, where appropriate we’ll look at pre-tax profits to assess affordability, which can support self-employed people obtain the level of mortgage borrowing they want and deserve, rather than having to make compromises on, or delay, their plans.


1 UK labour market statistics by Brigid Francis-Devine and Andrew Powell form the House of Commons Library, published 6th November 2023

Methodology - The Mortgage Lender surveyed 1,002 self-employed UK adults via Censuswide between the 13th September-18th September 2023

[1] UK labour market statistics from the House of Commons Library, published 6th November 2023 (page 12)