Since the controversial mini-Budget, a third more self-employed people looking for mortgages have been unsuccessful in finding a contract within their price range, according to recent statistics.
As former Chancellor Kwasi Kwarteng’s budget announcement caused market turbulence at the end of September, mortgage rates skyrocketed.
While mortgage rates have decreased slightly since then, the average cost of a loan is still greater than it was a year ago, putting a strain on the budgets of many potential buyers.
Mortgage Broker Tools, which uses its software to analyse cases, has recently released a report showing the difficulties experienced by the self-employed as a result of these price hikes.
It was reported that 28% of mortgage inquiries from self-employed borrowers had their proposed loan amount declined before to the mini-Budget in September 2022 because it was deemed unaffordable.
After the event, however, the percentage of unaffordable mortgage inquiries from the self-employed jumped by 32%, to 37%.
Self-employed people who are anxious about getting a mortgage should not lose faith. Mortgage Broker Tools found that, first, the market has become more competitive again, with lenders providing lower rates and more realistic stress tests.
Mortgage Broker Tools CEO Tanya Toumadj said, “As we saw from the mini-Budget last autumn, fiscal policy statements can have a significant impact on financial markets, interest rates, and ultimately the availability of mortgage finance, so we’ll all be watching closely to see what the Chancellor has to say at the Dispatch Box [in the Budget on Wednesday, 15 March].
Even modest changes may have potentially tremendous impacts on the prospects for individual clients, especially in the current uncertain economic situation, so it’s doubtful that this Budget statement will have quite such a dramatic effect on mortgage affordability.
If you’re self-employed, you can increase your mortgage approval odds by:
This article was designed to help self-employed borrowers better their mortgage application submission and approval odds.
Two or three years of account history and a high credit score will help your application, as would a substantial down payment.
In addition, it can be very useful to consult a broker, who will have access to more deals and can offer guidance on how to proceed in the face of obstacles.