Mortgage approval rate rising for self-employed

Thursday 31 March 2016

A new report has suggested that banks and other mortgage lenders are now far more likely to make it easier for self-employed people to get on the property ladder.

Research from the Intermediary Mortgage Lenders Association (IMLA) found that ‘non-standard’ applicants, such as first-time buyers, people borrowing into retirement and the self-employed, are seeing an increase in the number of applications being approved.

In fact, levels of acceptance are at the highest since the financial crisis in 2008, causing many lenders to introduce stricter lending criteria.

This boost will not only have a positive impact on self-employed people who are looking to get their foot on the property ladder, but is also good news for the UK economy as a whole.

Peter Williams, executive director of IMLA, said if lenders’ expectations are realised, there should be a significant expansion of the mortgage market in 2016, allowing all non-standard borrowers to have more choice and support.

The sudden improvement in lending to self-employed professionals is partly down to the introduction of the 'regulatory sandbox'. This acts as an incentive for banks and other mortgage providers to implement new services or products to help people like non-standard borrowers.

Mr Williams called the findings a "positive step", saying that recent conditions had helped standard homeowners - who are now enjoying record low rates and attractive remortgaging options - but "niche customers" have struggled to "find their feet" under the new regulations.

“This will mean greater choice for the growing segment of borrowers who are self-employed, along with increasing the number of products to support lending into retirement, as well as expanding the options for near-prime borrowers.The survey results offer good news for UK mortgage borrowers and the broker market,” he explained.

With the number of self-employed professionals rising, and this trend looking to continue, more mortgage providers may look to offer more favourable options for people who choose to work for themselves.

To increase your chances of getting a mortgage application accepted, it's important that anyone who is self-employed keep a good record of their expenses, as well as their business earnings.

Mortgage providers normally ask for these records when it comes to having a discussion about what the available options are. Being able to prove that you have a stable and reliable income will increase the likelihood that you will be able to get a foot on the property ladder.

 


By Victoria McDonnell

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