Contractor Mortgages self-employed borrowers
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New research from the Intermediary Mortgage Lenders Association (Imla) shows that most – 88% – of lenders are willing to extend funds to the self-employed.

Imla asked 24 lenders a series of questions regarding underserved borrowers, finding that, “Despite ongoing consumer concerns that only borrowers with straightforward incomes and perfect credit histories can access mortgage lending,” many lenders are in fact open to borrowers with more complicated financial histories.

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Specifically related to the self-employed, Imla discovered that criteria here has changed over the last 18 months.

The report show that 16% of lenders have reduced the period for which earnings must be shown, with 21% disregarding the 2020/21 tax year in favour of pre-covid accounts. And 25% of lenders will accept predicted revenues on these applications.

Moreover, 21% of lenders have changed their criteria for the sake of borrowers on furloughed income or those who had to go on a mortgage holiday, and 29% of lenders have altered their criteria to accept bonus, overtime or commission income in mortgage applications.

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Overall, 71% of lenders will consider borrowers with ‘irregular’ income and 63% will accept applications for multiple borrower products. Just under half, meanwhile – 46% – will look at potential borrowers with credit impairments in their history.

And regarding lenders themselves, 67% said that, since the start of the pandemic, they have invested in expanding their underwriting teams and 42% have grown their overall staff.

Just under half – 46% – have made investments in technology, meanwhile.

Imla executive director Kate Davies says: “2020 was the year everything was turned upside down – including the mortgage sector.

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“Lenders and intermediaries responded very well given the difficult circumstances and were able, in a remarkably short timescale, to continue to offer support and services to customers. This included millions who accessed payment holidays. This meant that, for a brief period, the range of mortgages offered needed to be reduced, but lenders are back in business with a full and very competitive range of products back on the market.

“Lenders are also very aware that, as we emerge from the worst of the crisis, borrowers who may previously have had non-standard financial circumstances may now have even more complex profiles. Lenders have responded to this – and there are now around 5,000 mortgage products on the market.”

By Gary Adams

Source: Mortgage Finance Gazette

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