Self-employed face remortgaging challenges

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Around 10% of the UK’s working population is self-employed, but many find it difficult to remortgage, says a February 2017 FT Adviser article.

The Office for National Statistics has said that in 2008, 3.8 million people were self-employed and this rose to 4.6 million in 2015. Simoney Kyriakou, a financial expert writing for FT Adviser, was surprised that with over 10% of the working population self-employed, there are not many financial products targeted at this demographic of workers.

Many self-employed business owners want to remortgage to release equity tied up in their home in order to invest the money in growing their business. Kyriakou reports that many high-street banks have limited their mortgage lending to the self-employed, and when they do lend, they often charge high interest rates.

Rather than approach well-known high street lenders, the self-employed can use mortgage brokers who have access to smaller lenders that specialise in self-employed clients.

Many large lenders insist on seeing at least two to three years’ worth of business accounts. This is impossible for startups that have been trading for less than two years, but some specialist lenders will consider applications from newly formed companies.

Another issue is lenders assessing the changing income of freelance workers, with many earning a lot one month, then little the next. This means that it is important to have fully detailed accounts and future cash flow projections.

Although the self-employed may find it more difficult to remortgage, a broker can help streamline the process.

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