Self-Employed Cases Don’t Have To Be Complex

Wednesday, May 8, 2024

There’s currently over 4 million self-employed people in the UK and many of these are currently looking for a mortgage…

According to Statista, there are 4.3 million people registered as self-employed in the UK as of December 2023. While this is down from the pre-Covid peak of 5 million in January 2020, recent growth of 190k between January 2022 and December 2023, indicates the trajectory may be on the up. What’s more is that a lot of these people are likely to be looking for a mortgage.

Our application numbers show a pretty sizable 14.5% year-on-year uplift in the volume of mortgage applications from people registered as self-employed. As we know too well, self-employed applicants often have their own unique circumstances which requires a different approach to lending criteria compared to what is commonly found amongst more mainstream lenders.

…but 40% of them feel left behind by lenders!

There appears to be a blind spot for self-employed client support. When we spoke to self-employed mortgage applicants who have complex circumstances, 40% of them felt that lenders need to have more understanding in finding mortgage products and criteria that suit their needs. This is especially true when it comes to multiple income streams.

Why do these clients feel let-down by the high-street lenders?

Many high-street lenders may be put off by a house buyer potentially not having a steady stream of income because of being self-employed.

Even if an application makes it this far, a high-street lender might still deem their income stream not viable enough to provide them with a mortgage offer. This type of reasoning is what is building the feeling from self-employed house buyers that they are being left behind.

We know how to help

We’ve got a track record of being able to consider cases that high-street lenders might turn away. Here are a few of our self-employed success stories.

A couple trading as Limited Company directors, looking to buy a new-build home

The circumstances of this house buying couple might seem like a tangle of details to begin with, but there was even more to come. A lot of lenders might have turned them away upon hearing that their company changed structure half-way through the application.

Undeterred, our underwriters got to work. As a measure of affordability, we assessed the applicant’s net profits before tax. We also accounted for an increase in their shareholding value to allow them to borrow the right amount for their dream home. We didn’t let the impact of the Covid-19 pandemic count against them by taking the previous year of their business’s trading figures, rather than an average of the last 2-3 years. Not only were we able to offer an 80% LTV mortgage for the property they had their eye on, but the team also progressed the application to offer in just ten working days! Read more here.

Being self-employed with adverse credit doesn’t have to be a barrier

It’s common for someone’s credit history to be impacted by unforeseen circumstances at some stage in their life. In our view, it doesn’t have to be something that keeps your clients from buying a home. That’s why our team work on a case-by-case basis to find solutions for brokers.

A mortgage application from a first-time buyer who was self-employed and had missed payments as part of their credit history might be a cause for concern. However, we managed to look beyond what was on the surface and offered an 85% LTV offer in only 5 working days. Further details here.

These stories are just the highlights from what we work on every day. Helping brokers to unravel the finer details of self-employed client’s financial circumstances to help them the right deal is our bread and butter.

Check out our full lending criteria for self-employed applicants residential mortgages here.

Make sure you don’t miss out!

We know that the majority of cases will be from customers with more typical income streams and circumstances. However, don’t overlook self-employed house buyers and remortgage clients with unique circumstances, you could be the help they need to secure the right mortgage.

Our research also found that 32% of self-employed people said that working with a specialist broker would make the process easier for them. This shows that there is a chance for you to expand your service offering and engage with new audiences.

We’re always here to help you with self-employed clients who have complex incomes. If you want to take steps to better market your services to clients beyond the current cases you deal with, we’ve got you covered with our guide on social media for brokers.

Raising your social profile can help you capture the interest of clients who might not have otherwise considered your services, including the self-employed, so make sure you put yourself out there. 

Please note article content was accurate at time of publishing