"While it’s encouraging to see mortgage rejection rates falling, the fact remains that millions of creditworthy self-employed individuals are still being excluded from the property market"
- Steve Griffiths - Shawbrook
Despite 79% of self-employed workers never missing a payment on their financial commitments, many continue to face obstacles when applying for a mortgage. This is according to research from Shawbrook, highlighting the ongoing challenges for a growing segment of the UK workforce seeking homeownership.
Creditworthy, but still declined
Shawbrook’s Home A-Loan report, which examines specialist lending and the hurdles for current and prospective buyers, found that among self-employed applicants:
34% were rejected due to a credit score considered insufficient
30% were declined because their income was viewed as too volatile
28% were turned down because their profession was judged irregular or unstable
The research shows some improvement compared to previous years. The proportion of self-employed mortgage applicants experiencing rejection has fallen from 45% last year to 24% this year. While lenders appear to be gradually adapting, significant barriers remain.
Delaying life goals to buy a home
The self-employed cite multiple challenges to achieving homeownership in the next five years. Among first-time buyers, the main obstacles include:
House prices (50%)
Affordability and cost of living (46%)
Raising a sufficient deposit (38%)
Self-employed accounts being scrutinised (38%)
Shawbrook’s research also highlights personal and financial sacrifices:
29% have remained renting longer than they wished
24% have reduced their social life
14% have delayed business expansion
21% have postponed other major life goals
Expert perspective
Steve Griffiths, commercial director for retail mortgages at Shawbrook, said, “Our research clearly highlights the ongoing disconnect between the realities faced by self-employed borrowers and the rigid lending criteria they encounter. While it’s encouraging to see mortgage rejection rates falling, the fact remains that millions of creditworthy self-employed individuals are still being excluded from the property market.”
He added, “The self-employed are a vital part of the UK economy, and it’s essential that their unique financial profiles are properly recognised. With brokers having greater clarity on how specialist lenders can offer tailored solutions, particularly when it comes to understanding annual accounts and cashflow for business owners, self-employed borrowers are better able to navigate the mortgage market with confidence.”
