"It’s clear that small business owners need more support from lenders and brokers in successfully progressing through the mortgage application process"
- Chris Kirby - Shawbrook Retail Mortgages
Small business owners are finding it more difficult to achieve homeownership, with more than half (53%) reporting that their employment status is a significant obstacle to their property ambitions, according to research from The Mortgage Lender.
Among those affected, 21% said they had considered abandoning their homeownership goals altogether, while 17% expressed concerns about never being able to secure a mortgage. Another 12% delayed their property plans due to fluctuating income.
This challenge largely stems from the complications small business owners face during the mortgage application process. Some of the key difficulties include figuring out the necessary documentation (21%), a lack of guidance on securing a mortgage as a self-employed individual (19%), and the complexity of the process itself (17%). Additionally, 17% of respondents said finding a lender willing to approve them was a major hurdle.
Even small business owners who have already applied for a mortgage have faced setbacks. 43% of business partners reported having some or all of their mortgage applications declined.
In order to increase their chances of obtaining a mortgage, many small business owners have resorted to lifestyle changes. For example, 21% have considered changing jobs to increase their income, while 17% have thought about taking on extra work. Others have reduced social activities (14%) or cancelled subscriptions (15%) to cut down on expenses. Additionally, 20% have looked at relying on a partner’s income to help secure a mortgage.
“It’s clear that small business owners need more support from lenders and brokers in successfully progressing through the mortgage application process," explained head of field sales at Shawbrook Retail Mortgages, Chris Kirby. "Small business owners are a fundamental cohort of the self-employed, often leading businesses in their success and direction for the future."
He added, "The fact that so many feel their employment status negatively impacts their ability to get a mortgage is a sign that the mortgage industry needs to address the issue and take action. Lenders and brokers must work together to help small business owners overcome the perceived barriers to homeownership that they are encountering, as there are potential solutions available that these customers aren’t aware of, and this could enable them to move forward with their home buying plans without further delay or compromise.”
