There is a widespread fear among contractors that they will experience more obstacles than permanent employees when applying for a mortgage, according to new research from Accord Mortgages. 

The survey showed that 22% of contractors and self-employed workers believe the way they earn their income has made it more difficult for them to get a mortgage compared to when they were in full-time employment.

Accord Mortgages commissioned the research as part of its renewed focus on understanding the needs of contractors which has led it to piloting a bespoke lending policy. The new process takes greater consideration of the way contractors receive their income, with five selected specialist broker firms with the view of expanding to the full market during 2017.

It showed that 29% of contractors believe that financial service providers perceive as them a bigger lending risk. The number of people worried about being accepted for a mortgage is greatest amongst those with less than two years’ experience in contracting work (19%) – however it is still a concern for the more seasoned worker (17%) who been contracting between three to 10 years.

Despite contractors and the self-employed equating to 22% of the UK workforce, almost a fifth of those questioned (19%) said they feel that dealing with financial institutions is more complex now due to their work status and 16% found the process of applying for a mortgage difficult.

The research showed a relatively even split between contractors and self-employed who secured their home loan through an intermediary (39%) and direct through a lender (40%). 54% who have been self-employed between one to ten years preferred to get their mortgage via a broker.

David Robinson, national intermediary sales manager at Accord, said: “It’s obvious why contractors are concerned about getting a mortgage: they are applying for the same products as everyone else yet often they have to jump through more hoops to secure it.

“Although their income can be irregular, in some cases they actually have a higher earning potential than when they were a permanent employee, so it must be frustrating to know they can comfortably make their mortgage repayments yet some lenders still view them as a risk.

“As more lenders serve this niche group better, it presents a golden opportunity for intermediaries. The application process can be complex for contractors so, as our data shows, many want a broker to expertly steer them through it.”