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Self-employed hindered by lack of trading history

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02/09/2011
The ability to prove adequate trading history is the biggest barrier to the self-employed getting a mortgage, according to 42% of brokers polled by Kensington.

In a survey of 619 intermediaries, a further 23% cited the complex income structure many self-employed people have, while 15% said that self-employed circumstances do not fit standard credit scoring systems.

In addition, 12% of brokers said that the perception of how difficult mortgage finance is to obtain remains the biggest barrier for self-employed clients.

Charles Morley, head of sales at Kensington, said: “It comes as no surprise that the main hurdles for the self-employed, when it comes to getting a mortgage, are trading history, complex income and credit scoring.

“While many successful small businesses emerge from recession, it is not unusual for a high street lender to ask for three years’ trading history, whereas the self-employed will often have a complex income structure from more than one source, automated decision systems take a more black and white stance on affordability.”

Michael White, chief executive for Email Mortgages, said: “Previously, there were a number of products, which by definition, were almost designed for the self employed.

“These included fast-track products, which still required credit referencing, but often saw a more flexible approach taken.

“Now it has all changed. As credit risk attitude has hardened, it is the self employed that have had the toughest precautions taken against them in terms of the minimum period they can be self employed for and the way in which their income is calculated.”

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