Getting a mortgage when you’re self-employed

When the country went into lockdown because of the Covid pandemic in March 2020, many people found that they were either furloughed or had to work from home to avoid unnecessary contact with other people in the workplace. 

This opened up the possibilities for starting a new business - and created the desire to buy a home that helped allow that dream to come to fruition. And the drive to be your own boss has not quelled with over four million registered as self-employed across the country.

Whether you are just starting your working life or simply want to change from the treadmill of corporate employment, the pull of being self-employed can be seductive.

One of the principal driving forces behind anyone wanting to go it alone and set up your own business is that you are the architect of your working life. Creativity can be explored without the usual constraints when being employed by a company, and there is the freedom to make your own choices and decisions - as well as learning from the mistakes that will make your business better.

Working for yourself also means that there is a real sense of job satisfaction, since you'll likely have chosen a product or service that you really enjoy - essentially turning a hobby into a business. 

But, as with everything, there are also downsides. If your business is reliant on the vagaries of the financial world or governmental decisions, then there can be worry and stress in the quieter moments where what you are providing is not in such great demand.

And starting a business will take a huge amount of effort and personal involvement to get it to a point where orders and requests are coming in and you can see yourself being busy from month to month.

But this unpredictability also means that you could be working long hours to establish the business or keeping it afloat in more difficult times. On top of this, there is no guarantee that you will have a large payday each month.

It's this financial uncertainty that makes self-employed people struggle to find a lender willing to take a risk so that they can get a mortgage to purchase their home.

Research by specialist lender Together shows that self-employed people have to look to save just over £50,000 on average for a deposit, with around 20% confirming that they are looking to buy a property over the next year.

While this is quite positive in that those who are self-employed are actively thinking of buying their next home, Together's research also indicated that the remaining portion of self-employed people believe that the lending criteria of most mortgage lenders means that they are unlikely to find a suitable mortgage product - or, at least, that the perceived risk is so high that they are priced out of applying for one.

There are lenders, like Together, who specialise in providing mortgages and loans that are not considered mainstream, which makes it easier for the self-employed to buy their own home. 

It would be worth talking to a mortgage broker to discuss your particular circumstances and requirements for a mortgage, because they will have the best and most up-to-date information on what is available and where the best fit is for any of the products on the market.

As Ryan Etchells, Together's Chief Commercial Officer, said: 

“The country's self-employed workers are crying out for lenders to support their home-owning ambitions.

“In a lot of cases, despite holding an average deposit of £51,000 saved for a new home, self-employed customers still contend with major issues, financial prejudices and a lack of understanding of their incomes and finance needs from mainstream banks. 

“In economically tough times, lending appetites for mortgage applications considered ‘complex' dwindle to almost nothing, which we would say is unfair when it comes to the nation's self-employed wealth creators.

“Specialist lenders can offer bespoke underwriting to get to know the borrower's individual circumstances. 

“It would be fantastic to see other lenders following suit, providing the same level of support for this large but underserved section of the UK's workforce.” 

So, if you are self-employed and are looking to buy a property, you'll want to make sure every penny counts on every aspect of the transaction, particularly when it comes to the legal side of things, requiring a high level of expertise and expertise with a high-quality service that is great value for money.

To this end, look no further than Homeward Legal. 

Our conveyancers will start work on your plans as soon as you agree to the quotation and appoint them to represent you. 

Homeward Legal will also provide a quote that will not change - what you are quoted is what you pay for standard conveyancing process, which means you can effectively budget for your conveyancing needs. 

There are some unforeseen items that might arise during the purchase and/or sale, which includes a specialist flood assessment report, but the solicitor discusses these and their cost as they come up. 

In addition, to protect the homebuyer further, Homeward Legal operates a ‘no completion, no fee' promise, which ensures that, should the purchase or sale not go through as planned to completion status, no payment is required.

Call  to get your conveyancing quote started, or to discuss your concerns with your plans to move.

Or you can get a quick quote, using Homeward Legal's easy-to-use quote generator.