A third of self-employed homeowners have increased their unsecured debts while a quarter have deferred mortgage payments to prop up their finances during the pandemic, according to new research by The Mortgage Lender (TML).

TML’s study, which was carried out in March this year among 1,000 self-employed homeowners or those who want to own their own home, revealed that unsecured debts – including personal loans, credit cards, and overdrafts – have risen by an average of £2,312 over the last year.

A quarter (25%) of the panel also said they had taken a mortgage payment deferral, while 16% had taken a break of up to three months, and 9% had deferred payments for between four and six months.

Furthermore, the study found that 81% of self-employed people in the UK kept up payments on their unsecured debt, but that 9% missed credit card payments, 5% reported an unpaid personal loan and 8% failed to keep up payments on other debts.

A deterioration in their finances meant that 55% of respondents felt they would not be able to borrow the amount they currently owe on their mortgage if it was based on their last year’s earnings.

TML sales and product director, Steve Griffiths, commented: “The last year has been hard for everyone but the self-employed feel as if they have been disproportionately hit by the pandemic increasing personal debt and deferring mortgage payments just to get by.

“Nearly 60% of the people we asked felt their experience of the pandemic was worse than an employee and the majority didn’t receive any financial support from the government.

“Nevertheless, there are millions of self-employed people contributing to the economy and the economic recovery. It’s vitally important there is a thriving, competitive specialist mortgage sector that is able to provide criteria and products that meet the needs of this segment of the population to prevent them from being locked out of the housing market or trapped in a home that no longer meets their needs.”

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