Traditionally speaking, product type, rates and mortgage terms have largely dominated conversations when it comes to residential purchases. These factors are still highly relevant but criteria is now playing an increasingly prominent role within these talks.
Yet this is still a topic which can sometimes fly under the radar and tends to crop up further down the line, rather than being addressed much earlier in the client exchange.
In my opinion, it’s time to bring criteria to the forefront of the adviser offering. By offering a service based around complex criteria, brokers can open the door to specialist cases where the value of professional advice can have a significant impact for a host of borrowers.
Self-employed challenges
Take self-employed people for example, with an added complexity such as their age. There are a growing number of reasons why someone might opt to be self-employed and, according to a recent report from Rest Less, this has become an increasingly appealing option for older workers.
The report found that almost half of the self-employed workforce across the UK are over the age of 50. What’s more, the number of self-employed people aged 50 or over has increased by 18 per cent in the last decade, a figure which was cited as being driven by the desire for flexible working and the need to work for longer as the cost of living crisis continues.
This data highlights some changing attitudes towards employment status and retirement plans amongst this generation, but what’s the potential impact of this from a mortgage perspective?
Challenges facing self-employed workers in securing a competitive mortgage rate have been well documented, so – for the purpose of this piece – let’s focus on this squarely from a criteria and manual underwriting standpoint.
It’s no secret but it’s worth pointing out that specialist lenders assess self-employed incomes differently.
For example, some will consider using the latest year’s income and satisfactory supporting information about the sustainability of that income, which may be an accountant’s note, bank statement or other. It’s bespoke underwriting, so this is where direct conversations with an underwriter really matter. When it comes to income many lenders are looking for sustainability and accountability.
When it comes to age, again this may differ depending upon the type of applicant and the lender in question but we can usually go up to the age of 75 and 364 days using earned income if the income is sustainable into that age bracket.
‘Sustainable’ is the key word from an income standpoint, even beyond those in self-employment, and this is also evident for cases where specialist lenders may be able to extend their lending capabilities for people deemed to be ‘professionals’.
In some cases, six times income may be available for residential applicants who sit within this professional bracket. Although, and you’ll notice a common theme here, this definition may differ from lender to lender. It can also encompass a wide range of different incomes including joint, secondary or even third incomes.
It doesn’t have to be complicated
I hope these relatively simple examples underline just how important a role criteria and manual underwriting is playing within the current residential purchase market.
They also demonstrate the importance of broker support teams in conveying the right messaging about the types of cases their lender may accept and, as importantly, the ones that they might not.
And with the specialist residential market constantly evolving, intermediary partners need to remain in close contact with business development management (BDM) teams to ensure that their clients have access to the types of solutions which can make a real difference for all their property-related aspirations moving forward.
