Charles Haresnape, managing director of Aldermore Residential and Commercial Mortgages (pictured), told Mortgage Solutions lenders should be doing more for self-employed borrowers.
“Regulation has constricted true product innovation but there is still room for development and that is what we will be focussing on,” he said.
Mortgage products for the self-employed have plummeted failing to support the massive rise in self-employed workers since 2008.
The self-employed have largely been behind ising employment figures, according to figures from the Office of National Statistics. Of the 1.1m more workers in April to June 2014 compared with January to March 2008, 732,000 were self-employed.
Tony Harris, managing director of Contractor Financials, said self-employed product development needed to put the mortgage at the very heart of the client’s financial world rather than be peripheral to their business.
Haresnape said Aldermore was looking at providing options which allowed the borrower to pay in and draw out money when it suited the needs of the business.
“We’re also interested in looking at part interest-only and part capital repayment mortgages and offering the facility to repay a large sum without penalty,” he added.
Harris said products which allowed flexible over and underpayments would reflect the realities of the cashflow challenges sometimes facing the self-employed.
“I’d also like to see an offset facility which allowed customers to link their trading account to their mortgage, such as the one launched by Santander some time ago,” said Harris.
But Harris said that while self-employed product development was much needed in the sector development in underwriting attitudes was long overdue.
“Some weight needs to be given to the borrower’s previous track record of earnings in the same field. Surely it’s of comfort to a lender that the applicant has earned good money in the same profession or trade.
“It strikes me as crazy that lenders completely ignore the earnings from previous employment and a borrower must start from scratch building up that history again.”