The Intermediary – March 2025 - Flipbook - Page 18
SPECIALIST FINANCE
In focus
Are we missing an
opportunity?
T
he UK economy is
driven by the selfemployed; and whether
it’s company directors
or gig economy
workers, their number
has exploded. However, they are
consistently being let down in their
property-owning ambitions.
Statistics show that there are around
4.4 million of these workers in the
UK. The pandemic saw deliveries and
online gig work increase by 7%, and
around 1.37 million workers were
added to the UK gig economy from
2019 to the end of 2021. In addition, a
study conducted by Together last year
found that self-employed mortgage
applicants are set to rise by 67% over
the next five years – from £20.9bn in
2023 to £34.8bn.
Disposable income
We conducted further research
this year that found this cohort is
siing on nearly £82bn of disposable
income, which could fund the average
first-time buyer deposit 1.6 million
times over.
Despite this, four in five of these
entrepreneurs have struggled to get a
mortgage. When asked why they had
been rejected, being unable to prove a
steady, monthly income was cited as
a key reason. 83% of those who work
for themselves say the mainstream’s
current mortgage lending criteria is
pied against them, and 87% are even
prepared to take on extra work to
prove their income on paper.
This is having an impact on their
goals, too; many of them put on hold
important life plans such as marrying,
having children or expanding their
businesses – potentially hiing future
earning potential – to get on or step up
the housing ladder.
This is hugely disappointing
considering that these individuals
oen demonstrate the entrepreneurial
spirit the UK desperately needs. At a
time when the global economy is so
18
The Intermediary | March 2025
unstable, they shouldn’t have to face
additional challenges when looking to
achieve their property ambitions.
Unfortunately, the problems oen
arise from lenders taking a ‘one-sizefits-all’ approach to applications.
Self-employed borrowers tend to have
fluctuating income levels, multiple
sources of income or be unable to
provide the necessary evidence of
income that mainstream banks
demand in their lending criteria,
and so when they face an automated
system they are oen rejected.
For brokers, however, this presents
an opportunity. There is clearly a
huge demand from self-employed
borrowers, so being able to serve this
group can give you a real competitive
advantage.
In our study, nearly one in 10 who
were rejected for a mortgage felt that
not being able to speak to an adviser
who understood their circumstances
was one of their biggest challenges.
Nearly three quarters of them told
us they don’t think there are enough
products on the market to meet their
needs or situation, and almost a third
who have applied for a mortgage in the
past found it a challenge to actually
The self-employed are being let down
MAEVE WARD
is head of intermediary
sales at Together
find a lender that can support their
application.
In addition, a third of respondents
in our research said that greater
flexibility on mortgage repayments
– including the ability to overpay
or underpay – would improve their
mortgage application experience.
There are options out there for
the self-employed, brokers just need
to know how to access the specialist
lending market to best serve these
customers otherwise let down
by the mainstream banks’ rigid
lending criteria.
Holistic view
There is a lot to be said for the human
underwriting approach adopted by
specialist lenders; it allows lending
decisions to be made based on a
holistic view of the borrower’s overall
circumstances, rather than being
driven by algorithms and a ‘computer
says yes or no’ approach.
We expect that the number of selfemployed will continue upward, and
with so much economic turbulence,
mainstream lenders’ criteria may
become more stringent. This cohort
will be looking for brokers who are
able to understand their needs, so
taking the time to learn about the
options available in the specialist
market will help you stand out from
competitors.
Keeping yourself educated and
up to date with the latest product
innovations and industry changes
is a must.
Brokers who can help customers
with their ever-diversifying needs,
and find solutions for self-employed
customers, will definitely stand out
from the crowd. ●
