In these strange and uncertain times, lenders are unsurprisingly exercising a modicum of caution and certain areas of the market have been hit harder than others. According to research from Aldermore Bank, being self-employed is now the most common reason for a mortgage application to be rejected[1]. Considering that, back in March 2020, it was the ninth most common reason, this shows how profoundly this sector of the market has been impacted.
If you’re self-employed, there’s no denying the lending landscape has become tougher, but there are still plenty of options available. We have a vast number of clients who work for themselves, from property developers and contractors to Solicitors and GPs, and because we have decades of experience in this area of the market, we have built up relationships with a range of lenders who understand the challenges faced by the self-employed, and are willing to take a view on our clients and their circumstances.
Case profile
Our young, self-employed client had seen a significant increase in income over the past 12 months. When deciding on maximum loan size, a lender would usually average out self-employed income for the preceding two years; however, doing so wouldn’t have offered our client the loan size he required.
Our Associate Director, Nigel Bedford needed to use his knowledge and contacts to find a lender which would base the maximum loan amount on the company’s latest year profits, backed by future projections for the business. The lender also needed to be comfortable with the fact that our entrepreneur’s deposit was largely gifted from their parents, a factor which has been an issue for some lenders since the global pandemic.[2]
Solution
Nigel found a lender who was happy to base affordability on the last 12 months’ performance of the company, even at the height of lender caution surrounding COVID-19. The lender was also happy with the gifted deposit and granted our client’s £800,000 loan at an exceptionally low, fixed interest rate, resulting in an excellent deal and an incredibly happy client!
If you’re self-employed or your circumstances are slightly outside of the norm, we have a team of specialist advisers who can help. We don’t do ‘off the shelf’ or ‘one size fits all’ lending, and that’s proven time and time again through our case history. Get in touch to find out if we can help.
[1] https://www.moneyexpert.com/news/self-employment-most-common-reason-for-mortgage-rejection/
[2] https://www.metro.news/home-loans-cap-at-bank-of-mum-dad/2098880/
