Self employed mortgage applications – the effects of the pandemic
Having seen the full impact of the pandemic on lenders, employed applicants, Buy to Let Landlords, and self-employed applicants, the biggest impact by far has been on self-employed applicants.
Pandemic effect on the mortgage industry
Obviously, anyone that has had their work or income affected by the pandemic will have gone through a significant period of uncertainty, but banks and lenders seemed content to continue to lend to landlords, employed applicants, and those on furlough without any significant hassle other than to get confirmation that they would continue to get paid, and would at some point in the future return to work on their pre-furlough wage.
Self-employed mortgage applicants
Self-employed applicants on the other hand have been made to jump through some significant hoops as their businesses absorbed the effect of the pandemic, where they were unable to trade based solely on government guidelines, took on government-backed loans and grants to get through possibly the toughest time they will have seen.
Another significant hurdle that had to be jumped was if their mortgage came up to be reviewed, or they wanted to move home for any reason.
Lenders criteria changed almost daily regarding self-employed applicants, some reduced the level of lending they would agree, some wanted to understand the position of the business pre, during and what it may look like post-pandemic, if a business took a Bounce Back loan, CBIL’s (loan) or a government grant then this started to have consequences for personal mortgage lending, and they effectively needed to share practically every part of their lives and business to be, hopefully, granted a mortgage.
Mortgage lenders’ reaction to the pandemic
We still see this process happening with lenders, even though the majority of the UK economy is back up and running, but lenders are still very cautious when a self-mployed mortgage application lands on their desk and will want to truly see under the bonnet of the company before agreeing to the mortgage!
Ultimately a bank will only lend when they have a fair degree of certainty that the applicant is able to pay the monthly mortgage payment over the long term, and that they effectively are not going to lend money to someone where the mortgage may actually put that person in greater financial difficulty sooner rather than later.
Response from mortgage brokers
As mortgage brokers, we are having to fight harder to get the lender to see the light at the end of the tunnel, provide more proof that the business is viable e.g. invoices that have been sent and then corresponding bank statements showing payments received into the business after the application has been submitted, future order’s, cash flow since re-opening…
We as brokers have strived to keep up to date with constant criteria updates and changes particularly levied against the self-employed, we will identify who will be best placed to accept the self-employed application from a hairdresser to an accountant, to a builder, to a physiotherapist.
Self-employed mortgage advice
Ultimately we will review the information needed before identifying the lender, and will happily navigate the lender’s criteria, wants, and wishes at the point of application. Therefore, we would highly recommend speaking to a mortgage broker if you are self-employed or have struggled to find a lender and if you have taken any government support whether that be a government grant, or a bounce Back Loan, or CBIL’s (loan).
For more information on how self-employed applicants can position themselves effectively prior to looking to apply for a mortgage see our other blog ‘What to consider if you are self-employed and looking to arrange a mortgage’
Ever since I started working, I wanted to provide people with the utmost service. This developed when I helped start my Dad’s business at the age of 16. I quickly realised there are many competitors out there, but very few can provide a service which can be relied on every time, and this is what I wanted to create with The Mortgage Branch.
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These guys are brilliant! Mortgage flew through, no hassle and made things very easy for me. Very knowledgable too which I appreciated as needed some advice on a few bits. Hugely grateful and would highly recommend to anyone.
The Mortgage Branch is definitely the place to go if you want highly professional, none judgmental, friendly and always available when you need to speak to someone or have any questions, even when they are on holiday!
The Mortgage Branch are an exceptionally professional and helpful team, who guided us through the application seamlessly. Our questions were met and answered at all times. We appreciated the direct guidance and experience, which, all in all means we can't recommend them highly enough to anyone applying for a mortgage.
Brilliant experience dealing with The Mortgage Branch. I’ll admit I had no idea about buying a house and all the thing involved when I first called, but they were so helpful in initially helping me understand the process, understand my initial budget, and once I had found a house and had an offer accepted they were extremely prompt, professional and friendly in progressing my Mortgage application, and subsequent insurance applications for me. All the way through the process they were very happy to answer any questions I had and continually gave me advice on anything and everything. I specifically dealt with David And James, and it was a pleasure dealing with them. Thanks, Sam.
Excellent company with truly professional standards. Communication and detail was spot on and the mortgage product they secured was fantastic. A stress free process in the hands of finance professionals. Highly recommend.
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