The Covid-19 pandemic has impacted the housing market in a major way and has only added pressure for banks to give out affordable mortgage loans.
Research by Mortgage Broker Tools found that 71% of self-employed cases processed through its platform in January 2021 were affordable, while 27% deemed it to be unaffordable.
It also found that the average maximum loan offered to self-employed mortgage applicants is £221,400 – a decrease of 3% from the last peak in August 2020.
Meanwhile, the minimum loan available to the self-employed recovered to £118,800, a 45% increase on its lowest point last April and a rise of 43% on November’s figures.
During a survey, self-employed workers expressed how they felt about the mortgage application process, why they were rejected and what they would suggest should be improved.
Key insights from the survey include:
80% of self-employed Brits have been rejected when applying for a mortgage
36.6% of applicants have faced at least one rejected
32.8% were rejected because their credit rating wasn’t good enough
When asked how individuals going through the mortgage process felt, they found that:
When asked how they can improve the mortgage application process:
46% believed that self-certification mortgages should be reintroduced
46.4% believe that removing the lenders requirements to have several years of certified accounts would significantly improve the application process
39.2% felt that a simpler process with less documents is required
David Baird, mortgage and protections advisor at Aventur Wealth, comments: “Covid-19 has had a huge impact on self-employed mortgages as we have seen increased discrepancy in the market.”
“From one major lender (Santander) restricting all lending for S/E applicants to 60% (In January - now at 75%) to others carrying on as normal, it has caused more confusion for the average buyer.”
He adds: “Personally, I have not seen a decline in acceptance rates, instead it has caused an increase in time taken on my part in researching the right lender for the right applicant.”
You can view the full study conducted by CIA Landlord Insurance here.