The number of workers in the UK who are Self-Employed has risen over the years, hitting 4.8m in 2017. This means that more than 1 in 7 workers are now self-employed. But how well-served are they when it comes to Mortgages and Protection cover? Not very, it seems…
(Source: Office for National Statistics, Trends in Self-Employment, February 2018 release)
Mortgages for the Self-Employed
Whilst there may have been a lack of desire in the past by lenders to support this sector, the tide seems to be slowly turning, with some taking a more favourable view.
However, there’s possibly a way to go, as research undertaken amongst the self-employed, such as sole traders, contractors and those running a business with up to nine employees, suggested widespread dissatisfaction with the way they are treated when applying for a mortgage.
For example, the majority (71%) felt they were discriminated against when trying to secure a mortgage. Whilst 26% of those asked admitted they would live in a different property if their income was treated in the same way as an employed person for mortgage purposes.
(Source: The Mortgage Lender, January 2018)
Of course, the lenders reticence to offer mortgages for this sector is that they prefer to see a stable income stream. Many of those who are self-employed may have an irregular income stream – some months may show a decent income, others may require a bit of belt-tightening.
However, the 26% figure mentioned earlier (those who stated they’d like to move or get onto the property ladder) equates to around 1.25m people. A sizeable amount; and one that may have influenced some lenders to look at how they could better support this sector. That’s why it’s vital that those who are self-employed seek financial advice, to help identify the more amenable lenders.
Unlike most employees – should they be off work for a lengthy period due to illness or injury – the majority of self-employed workers will not be entitled to Statutory Sick Pay and would, instead, have to pursue a lengthy claim for Employment and Support Allowance.
Yet as the self-employed worker is likely to be more exposed financially should they not be earning, it makes sense to consider the three main protection offerings; life, income protection and critical illness. However, nearly a fifth didn’t take up any kind of protection cover because they thought they’d not be eligible.* Of course, whilst there are some restrictions for example, with regard to Income Protection, there are also policies that are more tailored to their needs, so it makes sense to take advice.
(Source: *Drewberry, Protection Insurance Survey 2018)
Your home may be repossessed if you do not keep up repayments on your mortgage.
As with all insurance policies, terms, conditions and exclusions will apply.