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Self-employed workers struggle to secure mortgages

Self-employed workers are struggling to secure home loans despite a sharp rise in the number of mortgage deals available, as banks favour payslips over invoices, new research has revealed.

A survey by Nottingham Building Society found 12% of self-employed workers have been turned down for first-time mortgages or remortgages, underlining the problems of proving income and affordability for customers who are not full-time employees, because many are perceived not to be earning steady wages. 

The online poll of 1,065 adults revealed that 48% of the self-employed workers questioned earned about the same or more than in their previous job, but they are effectively being penalised by mortgage providers for running their own businesses.

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The number of self-employed people in the UK has risen sharply in recent years following the financial crisis, but the fact that a significant share of these people are unable to secure home loans will inevitably add to growing demand for rented homes in the coming years.

A separate survey by comparethemarket.com, of over 2,200 adults who have never owned a home, found that 33% of people - the equivalent of more than 5.5 million British people - think that they will have no alternative but to rent for life.

Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services, said: “Self-employment is growing rapidly and being your own boss should not mean you cannot successfully apply for a mortgage.”

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