Are you a ‘mortgage misfit’?

Getting a mortgage is far from plain sailing, but it can be harder for some than others. If you’re not doing a 9-to-5 with a regular salary, you may have a tough time getting approved – even if you can afford the mortgage you’re applying for. This may be because you don’t fit lenders’ idea of a low-risk customer.

Lenders usually like to see a consistent income, to ensure you can meet the monthly mortgage payments. But if you’re self-employed, working a zero-hour contract or retired, your income may be irregular. This can make it harder to prove your affordability to lenders.

Luckily, there are ways to boost your chances of approval. Here we look at the common ‘mortgage misfit’ groups, the challenges they face and how these may be overcome.

Common ‘mortgage misfit’ groups

Newly self-employed

Are you one of the 4.35 million1 self-employed in the UK? If so, mortgage lenders will usually ask for two or three years of proven earnings on a SA302 form issued by HM Revenue & Customs.

But this can prove difficult for those who’ve recently gone freelance or set up their own business. Fortunately, different lenders often vary in how they assess you. For example, some lenders may accept just one year of accounts and a projection from your accountant. Others may consider money left in the business (known as retained profits) or any assets you might have (such as an investment portfolio).

Zero hours/irregular income

Zero-hour workers don’t have guaranteed hours, and they don’t have to accept work offered to them by their employer. As with self-employment, zero-hour contracts can make it difficult to get a mortgage since your income may fluctuate.

Yet a surge of these contracts has prompted lenders to become more flexible. You may want to find a lender who offers manual underwriting, as this means your application will be looked at by a person rather than an automated system. Try and build up a track record of earnings to improve your chances – the Ipswich Building Society recommends between 18 months to three years of consistent income2 – and keep all P60s and payslips as evidence.

Older borrowers

If you’re remortgaging or buying property in later life, the mortgage term may stretch into your retirement years. Unfortunately, many lenders won’t approve you if you’d still be paying off the mortgage after the age of 70 or 75, when income is expected to fall. Some won’t even go beyond the age of 65.

However, lenders have become more flexible in recent years, with some extending their maximum age. For example, The Family Building Society says it’s offered up to a 5-year term to an 89-year-old, and up to a 16-year term for a 70-year-old. The company takes into account earned income up to age 70, and pension income beyond that3.

It’s not the only one, however. Nationwide, for example, raised its age limit so that customers can take out a mortgage up to the age of 804.

Getting help with your mortgage

Any ‘mortgage misfit’ may benefit from using a mortgage broker. As experts in their field, they can help you navigate the market and find a lender that suits your needs. Brokers vary in their fees and market coverage, so always ask for details before committing. For specialist advice at no cost, contact our trusted partner L&C, the UK’s leading fee-free mortgage broker

Before getting advice from a broker, it can be useful to know what mortgage offers are out there. You can search and compare mortgages with Experian for free, and it won’t affect your credit score. And remember, a high credit score can also boost your chances of getting a mortgage. Check your free Experian Credit Score to get an idea of how lenders may see you.

1Source: Trends in self-employment in the UK, Statistica, 2021

2Source: Ipswich Building Society

3Source: The Family Building Society

4Source: Nationwide