Mortgages for Freelancers
The number of people who are self-employed has jumped dramatically in recent years, from 3.3 million in 2001 to 4.8 million in 2018. Many of these work as freelancers. A freelancer can work in any of a number of fields; it’s a catch-all term that can cover journalists, copywriters, authors, illustrators, trainers, web developers, marketers, PR and virtual assistants … and many more besides. When it comes to getting a mortgage, they ought to have the same options as an employed person earning a similar amount but, unfortunately, lenders tend to view – and treat – them quite differently.
There is no such thing as a “self-employed mortgage” or a “freelance mortgage”. Everyone potentially has access to the same deals – the tricky thing is being accepted. As freelancers generally have a variable income, they can benefit from fixed-rate mortgages that allow them to budget. Alternatively, flexible mortgages that allow the borrower to overpay or underpay depending on circumstances, or even take a payment holiday, can be useful.
Another type of mortgage that might work well for a freelancer is an offset mortgage. With this, the mortgage is linked to whatever savings you hold with the same lender. Say the mortgage is for £120,000 and you hold £15,000 in savings; you would pay mortgage interest on £105,000, rather than the full £120,000, as the amount of savings held is taken into consideration. In addition to any actual savings they may have, freelancers generally set money aside each month for tax, so they can benefit from that, too.