Self-employed or in the gig economy? A mortgage isn’t beyond your reach.

With many companies and online platforms, such as Amazon, Uber and Fiverr, now simplifying temporary work on a job-by-job basis, taking ‘gigs’ is becoming a common and popular route into self-employment for many, especially younger workers.

According to the latest figures available by the Government, 4.3 million Brits class themselves as self-employed, with 463,000 workers now part of the gig economy.

However, despite more people going it alone, the self-employed market remains underserved when it comes to loans and mortgages, with mainstream lending criteria often making it more difficult for these types of workers,  along with contract workers, to secure finance. For example, most high street banks will ask for two years of accounts when deciding a mortgage application, which can make it hard for the newly self-employed, even if they have extensive experience in their field.

Major banks also traditionally want to see proof of a steady income (the longer, the better) without any fluctuations or gaps in employment, even though that’s the reality for many Brits in today’s world.

The self-employed market

There are similarities between self-employed and contractors versus gig workers and freelancers, but there are some key differences which makes the latter even more likely to be underserved by mainstream lenders.

While self-employed business owners and contractors will tend to have longer-term arrangements, gig workers are likely to have more than one client at a time and be hired to complete one task at a time too. Moreover, the money they’ll earn is likely to be even more irregular in its amount and frequency.

Secondly, it’s not uncommon for employed people to freelance online in their spare time as a way to earn extra income, particularly creatives and those in the technology sector. For example:

It’s something that’s likely to become more necessary as the UK navigates the rising cost of living; research across various freelance platforms has already revealed that a large number of Brits are undertaking multiple jobs to top up their wages amid rising overheads.

This shift in working trends has led to calls for greater flexibility in the lending market, as many self-employed are precluded from accessing funds they need. 

Self-employed mortgage requirements

Many self-employed people need to borrow money to make their property ambitions happen. However, a growing number believe that their chances of buying or renovating a property could be out of reach because they expect to get turned down for a mortgage, simply because of their job status and irregular income.

Being self-employed can make applying for a mortgage or loan more difficult; they have no employer to vouch for them, and proving their earnings and affordability to some mainstream lenders can be tricky. This is particularly true if they haven’t been self-employed for more than two years.

However, self-employed borrowers could be pulling the plug on their property dreams too quickly simply because they don’t know where to look.

If you’re self-employed or work in the gig economy, help is at hand.

Here at Together, we’re what’s known as a ‘specialist lender’. One of the reasons specialist lenders like us exist is to help people who might struggle to get a loan or mortgage with a mainstream bank or building society.

Rather than relying on algorithms or tick boxes, our experienced underwriters look at the bigger picture, and get to know you - the person behind the numbers. They're empowered to use their common sense when making decisions, and take everything into account when looking at what you can afford.

We’ll consider self-employed borrowers with a 12-month trading history, and can accept an accountant’s certificate, SA302s or tax calculations submitted to HMRC as proof of income. We’ll also consider self-employed borrowers with a less than perfect credit history or someone wanting to borrow against an unusual, non-standard property type.

*Any property used as security, including your home, may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Being able to demonstrate a solid and stable working history can still help a lot when approaching a specialist lender, even if you’ve have taken up different contracts, moved into different sectors, or have multiple sources of income.

We review applications from self-employed people in all these situations on a case-by-case basis, and don’t require a minimum amount of income or set a loan-to-income ratio. We’ll generally use your most recent year’s net income and, in some cases, will look at projected income when making our decisions.

Flexibility is key for us – and we know the same is true for you; that’s why we’ve got interest-only repayment options available, which can be helpful when you’re looking to invest profits back into your growing business.

Ready to realise your property ambitions?

To learn more about the finance products available for self-employed borrowers and contractors, speak to our friendly team of experts.