The range caters for breaks between contracts and offers flexible offset payment options with fixed rates.
Leeds worked in partnership with two broker firms to develop the suite of products targeting the gaps in the market left by other lenders. Following the lengthy development process, a phased roll-out of the range has begun through selected broker firms.
The society is offering a fixed rate offset mortgage, which Contractor Financials, one of the firms involved in the pilot, described as ‘exciting’ for sector’.
“The Woolwich offset mortgage was the default product for freelancers but during the credit crunch it pulled its contract underwriting. It’s great to see Leeds come in with this option,” said Contractor Financials managing director Tony Harris.
Highlights from the range include a two-year fixed rate at 3.19% up to 85% loan-to-value (LTV) and a five-year fixed rate at 3.89% up to 75% LTV. Both products have a free valuation up to £560.
Key innovations include allowing a six-week work break between each contract against six weeks per year for other lenders and its criteria will accept applicants with 12 months’ experience in any sector.
Lenders view breaks between contracts as a blemish on the borrower’s employment record. But Harris said professional contractors use the breaks to improve their business.
“Gaps between contracts are typically spent training, obtaining advanced certificates or adding to their skill set. The breaks can be down to a human element too. Freelance workers build up a war chest so they can take six weeks off work to go and sit on a beach somewhere. They are a highly motivated sector of the workforce, they work their socks off and take a break when they can afford it.”
Martin Richardson, Leeds Building Society’s general manager, business development, said it had recognised that while the number of professional contractors was growing, they had limited choice when it came to securing a mortgage.
“We are keen to broaden this choice and have looked at the difficulties contractors encounter through traditional underwriting and how we might overcome these,” he said.
Harris said far too many lenders launch self-employed mortgage products without engaging with brokers on what their clients need.
“It has been a long process of going back and forth with feedback on the products but Leeds’ approach to engaging with intermediaries was very professional.
“They did a cracking job and the end result is testimony to the time and effort they put in.”
