If I were more entrepreneurial or much better connected, the business I’d be getting myself into right now is providing mortgages for freelances.
Being a freelance, as I have been for most of my working life, suddenly feels like being part of a growing demographic. Partly that’s down to people who were kicked out of jobs over the past decade’s various financial crises reinventing themselves as freelance to save their new employer’s national insurance bill or just to avoid being labelled unemployed. Partly it’s the freelance-by-another-name ‘zero-hours contracts’: employed only when you’re needed (or ‘only when you chose to work’), paid only when you’re used. That sounds awfully familiar.
Of course there are advantages to being freelance, otherwise why would we do it? But a definite downside comes at mortgage time. Despite being part of a growing demographic, a freelance is still seen as ‘unusual’ or ‘difficult’, required to provide mountains of paperwork including tax returns and certified accounts, since you don’t have a file full of payslips to prove you’re a regular earner. The fact that freelances who have been at it for a while tend to keep getting work whereas a traditional job could end at any moment doesn’t really seem to register.
Worse: since the best mortgage deals tend to offer a good rate guaranteed for just a couple of years, and it’d be crazy to stick with the much-more-expensive ‘standard’ rate beyond that, this becomes a regular cycle, over and over again for the life of the loan.
Each time, you discover that the sand beneath your feet has moved a little. I’ve been lucky to work abroad quite a lot in the past two years; it was therefore slightly problematic to hear that overseas income wouldn’t count as part of my earnings – not even income from Europe, which we are still (just) a part of and so can still (for now) work freely in, and not even when the payments landed in my bank account converted to pounds.
My accountant suspects this is because of the increasingly stringent money-laundering checks banks are required to carry out; this probably means it’s not an issue limited to just one lender. If you work overseas, be warned. A good broker might help. A friendly building society agent with a freelance partner, who therefore understands, might help more. If only you could find one of those.
But a growing demographic poorly served by an existing market: is that not the classic opening for innovation, for a willing entrepreneur? In many cases those who don’t have the numbers they need to get the mortgage are actually already paying more in rent – a proof, of sorts, of their ability to pay. Sure, you need a more formal way of defining that, but surely that’s not too hard a thing to work out?
Could I do it? No: I have a mortgage to pay. But if the right person is reading this, please do take the idea and run with it. I’ll be in touch in a couple of years when my new deal runs out.