More than a quarter of adults with complex incomes have been denied a mortgage

• Those on zero hours contracts have the highest rejection rates, with 46% having had a mortgage application denied
• Freelancers come second, with 29% having been rejected by a lender
• Reasons those with non-typical incomes have been rejected include not having bank statements for the last 3-6 months, not having the last 3 months’ pay slips and P60 form, and lack of mortgage guarantor

28% of adults with non-typical income streams, including those who are self-employed, freelance, or work on zero-hours contracts, have had a mortgage application rejected by a lender, according to new research from The Mortgage Lender (TML).

Delving into the breakdown of employment types, those on zero hours contracts have the biggest rejection rates, with 46% having had a mortgage application denied. Freelancers come second, with 29% having been rejected by a lender, followed by 10% of self-employed people.

For those who have a complex income, it can be more difficult to get a mortgage because borrowers are perceived to be a higher risk to lend to than those who are paid under a traditional employment contract. While nearly a third of this group have been denied a mortgage in the past, encouragingly 26% of those reapplied.

Looking at reasons why those with complex incomes were rejected for a mortgage, 13% said it was because of no proof of deposit. A further 12% said a lack of mortgage guarantor was the reason, while the same number said they were denied a mortgage as a result of them making too many credit applications.

Other reasons include not having bank statements for the last 3-6 months (10%), not having the last 3 months’ payslips and P60 form (10%), not having their tax return form SA302 (9%), not having a statement of two- or three-years’ accounts from an accountant (9%), a poor credit score (10%), and unused credit cards (10%).

Steve Griffiths, Chief Commercial Officer at TML comments: “Getting a mortgage has traditionally been trickier for those who have a more complex income, such as being self-employed, owing to the fact they are viewed to have a less predictable income stream. But this doesn’t make them unmortgageable. The reality is, as we recuperate from the impacts of the pandemic, and now with the rising cost of living, high inflation and interest rates, affordability continues to be a top concern for those trying to reach their homeownership goals.

“Encouragingly, our research has found those with complex incomes have not been deterred from getting a mortgage, with many reapplying at a later stage. This does however highlight the importance of seeking advice from a mortgage broker and considering specialist lenders who can be instrumental in supporting those who thought it might not be possible to get a mortgage and give them the same access to opportunities to get on the property ladder as those on PAYE.”

TML has a real-life lending approach and aims to support its customers through a simple, fair, and flexible affordability criteria. For those with non-typical incomes, TML may assess income based on, for example, contractor day rate or annual income from established zero hours contracts, For the self employed, income is based on the most recent year’s profit before tax   with businesses that have their first years year’s accounts also considered.

Reasons those with non-typical incomes rejected in mortgage application:

The Mortgage Lender surveyed 2,000 UK adults via Opinium between 11^th March 2023 and 13^th March 2023.