Mortgage market expands for the self-employed
The self-employed reportedly account for 15.1% of the UK’s working population and yet historically have the hardest time getting a mortgage.
With the number of self-employed steadily rising since 2001, specifically the increasing number of 16-24-year-olds choosing self-employment, lenders are starting to recognise that a large proportion of would-be borrowers don’t fit the standard credit criteria.
Mortgages for the young professional
Kensington Mortgages have focused their latest efforts on providing enhanced affordability for young professionals, stating that they recognise that applicants in these professions are often self-employed or contractors, which can result in them being unable to meet the criteria of high-street lenders.
If you are a chartered accountant, actuary, barrister, commercial pilot, dentist, medical doctor or solicitor you can qualify for a Kensington mortgage with a minimum income of £35,000 as a sole applicant or £50,000 as a joint application. To be eligible for rates starting at 3.14% on a 2-year fixed rate at 75% loan to value (LTV), applicants must be registered with the appropriate UK professional body and be practising in their field.
Two-year discounted deal for the self-employed
TMA Club with Buckinghamshire Building Society has announced an exclusive two-year discounted deal for self-employed borrowers. Available for purchases and remortgages, the two-year discounted rate of 3.59% is available up to 70% LTV with a maximum loan of £500,000.
The product may not be the cheapest deal around, but Buckinghamshire’s flexible underwriting approach is the most critical factor for self-employed applicants. The discounted deal has also been designed for borrowers who fit the lender’s non-standard credit criteria; it’s not a pre-requisite for self-employed applicants but is certain to be a welcomed approach.
Lenders need to reflect today’s workforce
With over 4.8 million self-employed in 2017, it’s surprising how slow mortgage lenders have been to recognise and address the issues faced by these borrowers when trying to secure a mortgage. Still many lenders rigidly consider self-employed income as that shown on an applicant’s personal tax return, when in reality it is rarely that straightforward.
As lenders vie for borrowers in a competitive market, they should be making strides to understand the self-employed and their frustrations with traditional lending and challenge themselves to improve their mortgage application experience.