A SELF-EMPLOYED worker has told of her struggle to get a mortgage, leaving her feeling like she’d been blacklisted by lenders.
Eve Scragg, 36, said high street lenders refused to give her a home loan because she was her own boss.
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Around 4.4million Brits are self-employed and can struggle to pass mortgage affordability tests.
That’s because lenders want to make sure you have a reliable income and will be able to make your payments.
Eve set up her Bristol-based marketing agency four years ago before registering it as a limited company in April last year.
Eve and her partner thought that they should get a loan easily, especially as the company was taking in £80,000 a year.
But it was a different story when they started applying.
“The problem was credit score and that I’m self-employed,” Eve told The Mirror.
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“All the major banks said I didn’t have good credit,” she added.
“It turned out not having borrowed money previously, which I thought was a good thing, turned out to be bad in that respect.”
She eventually managed to get a mortgage with a specialist lender called Bluestone Mortgages.
How can I get a mortgage if I’m self-employed?
Self-employed workers are still entitled to apply for the same mortgages as everyone else and will have to pass the bank’s affordability tests.
But lenders will want to see more evidence of your income since you don’t have an employer to back you up.
It might be helpful to contact a mortgage broker to help you prepare all the information you need to provide ahead of your application.
You should have two or more years of accounts, and it could be a good idea to hire an accountant.
Self-employed workers might find they need a bigger deposit and a strong credit score to get a home loan.
If you struggle with mainstream lenders, you could look at specialist mortgage providers, like Eve did.
But make sure you do your research and that you’re getting the right deal for you.
Charlotte Nixon, mortgage expert at Quilter, said: “Unfortunately, due to the lumpy nature of a self-employed person’s income they can find it hard to get a mortgage.
“This is where a mortgage adviser is worth their weight in gold, as they can search out the best deal and ensure that your finances are laid out in a way that means that lenders will accept the application.
“They can also search for more specialist lenders who cater for this type of borrower.
“Similarly, lenders also are much more likely to lend if an applicant’s accounts have been prepared by a qualified accountant as this will make them more confident of their reliability.”
She added that newly self-employed people will face an “uphill struggle”.
Changing your business structure from a sole trader to a limited company could also reset the clock on your accounts.
Unfortunately, you might also struggle if you used any of the self-employment Covid grants.
New mortgage rules could make it easier for first-time buyers and self-employed workers.
A self-employed couple were able to get their dream house without a traditional mortgage.
We spoke to a mortgage adviser who shared the top five things first-time buyers should avoid.
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