The current economic climate has made it difficult for many people to secure a mortgage, but those who are self-employed have been particularly hard hit. This is due to the mini-budget announced by the government in April 2020, which has caused a decline in mortgage prospects for self-employed individuals.
The mini-budget was designed to help the economy recover from the effects of the coronavirus pandemic, but it has had a negative impact on self-employed individuals. The budget included a reduction in the amount of tax relief available to self-employed people, which has made it more difficult for them to qualify for mortgages. This is because lenders take into account the amount of tax relief when assessing an individual’s ability to repay a loan.
The mini-budget also included changes to the way that self-employed people calculate their income for mortgage purposes. Previously, lenders would use the average of the last two years’ income when assessing an individual’s ability to repay a loan. However, the new rules mean that lenders must use the most recent year’s income when calculating an individual’s income for mortgage purposes. This has made it more difficult for self-employed people to qualify for mortgages, as their income may be lower than it was in the previous year.
The mini-budget has also made it more difficult for self-employed people to access other forms of finance, such as credit cards and personal loans. This is because lenders are now taking into account the reduced tax relief when assessing an individual’s ability to repay a loan.
The decline in mortgage prospects for self-employed individuals is a worrying trend, as it could lead to further financial hardship for those who are already struggling due to the economic downturn. It is important that the government takes steps to address this issue and ensure that self-employed people are not unfairly disadvantaged when it comes to accessing finance.