Self-Employed Update

Self-Employed Mortgages – Lending Criteria and Grants Update October 2021

Jodi Spreadbury joins the Mortgage and Protection Podcast to bring us an update on the recent changes made to lending Criteria and Grants for the Self-Employed.

Can Self-Employed people get a mortgage?

Absolutely, they can. With Self-Employed applicants, it’s always been case by case as every single Self-Employed person is different. A lot of lenders are updating their criteria quite frequently to support Self-Employed people and now lenders seem to be really proactive in looking at everything on more of a case by case basis.
Can you still get a mortgage, if you’ve had a Self-Employed grant (SEISS)?
Every lender has different criteria, and there are some lenders saying that if you had a grant then they can’t offer you a mortgage at all. There are a lot of lenders, however, that fully understand why in 2020, and even the early part of 2021, people needed these grants.

These lenders are now looking to see if people have had these grants recently and details about why the grant was needed, rather than saying no in blanket terms to anyone who has ever claimed a SEISS grant. This means that with some lenders, if there’s a really good reason for needing a SEISS grant and it wasn’t claimed recently, then it’s still possible to get a mortgage.

Does having a grant harm my chances of getting a mortgage?

Our advisers have done all of the required learning, webinars, and criteria updates with regard to this situation over the past six months. Having a conversation with one of our advisers will involve them looking back over the last two and a half years to see what happened pre-Covid and what’s happened in the last six months.

We always try to offer solutions, but it might not necessarily be a solution on that day. For example, we might suggest that you would be best waiting until the following year, at which point you would be in a better position to apply for a mortgage. Obviously, this is judged on a case by case basis, depending on your individual circumstances. We will try to give as much feedback as we can as to what you can do to put yourself in the best position to get a mortgage in the future.

What extra documents are being asked for now?

Lenders are asking for more documents for standard Self-Employed mortgage applications than they were a couple of years ago. Whereas business accounts and your personal tax returns have always been required, in addition to this business bank statements for the last three to six months and pre-covid are being requested.

They will look at what your business did in 2019, but obviously, if 2020 doesn’t look great, you won’t necessarily be penalised for that. If the last six months bank statements are showing good activity, along the levels of what it was pre-covid, lenders are far more understanding.

Is there anything else Self-Employed people looking for a mortgage should consider?

I can’t emphasise enough how important it is to speak to an adviser who understands Self-Employed mortgage applications. All of our advisers have extensive training on self-employment. Everything is case by case, so let our advisers look into it for you. Even if you aren’t able to get a mortgage right away, in six to twelve months you’ll be in a stronger position. It’s not going to cost you anything, and you’ll know exactly where you stand.

For those who are worried, it’s never a case of lenders saying no forever. And if they say no, now we’ll help you understand what to do going forward. If you don’t deal with what potential issues there might be, it could roll on for another couple of years. There’s nothing to lose by having these conversations now and really understanding exactly what you need to to be doing going forward, but if your business is actively bringing in an income, then you’re already on the right path.

If you have any questions then from the Mortgage Broker Limited website, navigate to the contact page and get in touch with Jodie or another member of the team.