Self Employed and Credit Impaired Do Not Apply for Mortgages
Published / Last Updated on 24/02/2022
Research by Bluestone Mortgages has found that 42% non-standard potential mortgage seekers end up not bothering to apply for a mortgage.
42% means nearly half of potential property buyers pull away and do not apply for a mortgage. The non-standard mortgage market is made up of:
- Self-Employed where incomes may be difficult to prove or volatile depending upon seasons or trade conditions making it difficult for a mortgage lender to assess affordability.
- Credit impaired where you have a poor credit history or county court judgements against you will mean many mortgage lenders will not lend to you as you have had credit problems in the last.
- No credit history? For example, there are sone people who have no credit record as they have never bothered to have an credit or finance so lenders cannot judge whether you can be trusted to manage a debt.
Many now fall into the above categories and plan to stay on the rental market due to past failed mortgage applications.
Comment
For nearly half of the UK working population to not be served by the mortgage market is worrying. ‘The computer says no’ is not the answer. Whilst we accept that pour credit history will always present a barrier, there should be a regulatory requirement that all lenders are required to explore the reasons why credit problems occurred. For example, if you were made redundant and got into financial difficulty but have since recived, there should be a requirement for lenders to consider. If you are a spendthrift or wastrel then you must accept that you are unlikely to manage a mortgage.
If you have no credit history, then this should not be a barrier. Equally, for self-employed that have previously done ‘cash jobs’ so their income is lower than expected then ‘tough’ you get what you deserve but equally Making Tax Digital (MTD should pull more self-employed people into line and therefore eligible for a mortgage.
All is not lost. There are specialist mortgage lenders and brokers than can help with non-standard mortgages.