A significant number of young people in the UK want to start their own business but are concerned it will mean they can’t qualify for a mortgage.
According to research from Nottingham Building Society, approximately 58% of 18-24-year-olds and 48% of 25-34-year-olds want to start their own business but are worried it could impact their ability to qualify for a mortgage.
The research found that 59% of 18-24-year-olds and 50% of 25-34-year-olds want to turn their hobbies or interests into their own business, but fear it will negatively affect their chance to get on the housing ladder.
Around half of those 18-24-year-olds say they have never seriously considered turning their hobbies or passions into a career as they could not save enough money or be eligible for a mortgage.
Nottingham Building Society said the research shows a “growing problem” in the UK, as young people are having their “creativity and entrepreneurial spirit stifled by what many perceive to be an outdated mortgage system that doesn’t support their needs”.
The report noted that with the average age of the first-time buyer estimated at 34, this could indicate many are shelving their professional aspirations to start their own business to be “financially viable” to get onto the housing ladder.
How the housing landscape is set to shift
Sponsored by Halifax Intermediaries
The research also shows that over a third of under-35s believe they will have to get financial support from a friend or family member to get onto the housing ladder.
The report could also indicate that there are misconceptions around self-employment and mortgages.
The latest figures show that there are around 4.4 million self-employed people in the UK, consisting of 13.1% of the population.
However, the mutual said full-time self-employed people earn around 21% less than full-time employees, meaning it could be a “harder journey towards homeownership”.
Praven Subbramoney, chief lending officer at Nottingham Building Society, said: “The choice between pursuing your passions and owning a home should not be one that anyone has to make. Young people are brimming with creativity and ambition, but our research reinforces what we’re hearing time and time again from brokers; that outdated lending models are holding too many young people back.
“When we support entrepreneurs in achieving their career and homeownership dreams, we’re not just helping individuals, we’re building stronger, more vibrant local economies. Small businesses and sole traders are often at the heart of our communities, and if they never have the chance to get off the ground, then society misses out. The solution is clear: lenders must evolve to meet the needs of a modern workforce and give young people the confidence to chase their dreams while planning for their future.”
