Mortgage lenders turn against the self-employed, even if they have a healthy income
Experts warn that self-employed people with a healthy income are wrongly rejected.
Banks are imposing tighter controls on anyone who works for themselves, fearing their finances could be adversely affected as a result of the pandemic.
But brokers say viable borrowers will be frozen from deals.
Banks are imposing tighter controls on anyone who works for themselves, fearing that the pandemic could adversely affect their finances
Some lenders refuse to consider bonus or overtime wages, while others refuse all self-employed applicants.
Coreco’s Andrew Montlake says there is no point in “painting everyone with the same brush”.
He adds, “We’re seeing more relatively strange decisions on applications that would have flowed through before the pandemic broke out.”
He says a “worrying trend” is that lenders are turning down applications based on hearsay. For example, a lender ignored a worker’s bonus based on an old article read about their company.
Mr Montlake says Coreco has worked with famous musicians and film directors who, despite a lot of work, have been turned down.
Rachel Dixon, mortgage advisor at RH Dixon, says two self-employed clients were turned away in the past week.
A UK finance spokesman says lenders take different approaches based on risk appetite and will consider a number of factors including employment status, industry and payments.
It happens that banks are returning to first-time buyers by reintroducing a number of low-deposit mortgages. NatWest was the last lender to re-launch 90 first-time PC deals on Monday.
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