Self-employed people are making considerable sacrifices as they struggle to save enough money for a deposit on their first home.
Research carried out by mortgage lender Aldermore, between 21 to 26 February 2017 among 1,502 potential first time buyers and 502 actual first time buyers found nearly two-thirds of self-employed people do not know how they will manage to buy their first home.
A third (32 per cent) face being forced to give up being self-employed and more than one in 10 (12 per cent) having to take on a second job to earn extra money.
Nearly one in three (30 per cent) have cut back on eating out, almost a quarter (23 per cent) have cut out holidays, while over one in five (21 per cent) have been working longer hours.
Raising the deposit remains the biggest obstacle for first-time buyers, with a quarter (26 per cent) hoping to borrow from their parents to help fund their purchase.
News of the struggles facing self-employed first-time buyers comes shortly after the government backtracked on a controversial rise in national insurance contributions that some commentators believe could have compounded their problems.
Almost half (46 per cent) of self-employed first-time buyers believe that the issue of rising house prices should be addressed and nearly two in five (39 per cent) believe the Help to Buy scheme should be extended.
Meanwhile, 30 per cent want to see the whole house buying process simplified and 37 per cent called for better mortgage products, as well as adapting the criteria for self-employed borrowers (33 per cent).
Charles McDowell, Aldermore’s commercial director, mortgages, said: “First-time buyers are the driving force of the property market but our Index reveals just how hard it is for them to get on the ladder, even more so for those who are self-employed.
“Low levels of confidence amongst these groups will have ramifications further up the housing chain so it’s imperative that more is done to support both segments of our society, particularly with levels of self-employment continuing to rise in the UK.”
Aldermore has reduced the number of years’ accounts a self-employed borrower must provide when applying for a residential mortgage from two years to one in response to the difficulties they face.
Andrew Montlake, director at London-based Coreco, commented: “I think it is something that needs to be continually looked at. There are a few more choices now – a few more lenders are offering mortgages with just one year’s account, but there is still more work to be done.
“A lot of self-employed people assume they can’t get a mortgage when there are some available to them, so more education is needed.”