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‘Common sense’ required from lenders on changing job roles ‒ analysis

  • 14/10/2019
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‘Common sense’ required from lenders on changing job roles ‒ analysis
Brokers say that lenders need to employ common sense when handling applications from borrowers not in a mainstream career.


Tipton & Coseley Building Society last week adjusted lending criteria to consider applications from newly-qualified teachers declaring that prospective borrowers on their first 12-month contract often find it difficult to access finance.

Richard Groom, head of sales at the Tipton, said such applicants “can often be frozen out because many lenders apply standard criteria for newly-qualified teachers”.

And brokers have argued that borrowers in other less straightforward jobs may also suffer from lenders employing overly rigid lending criteria.


Keeping it sustainable

Carmen Green, mortgage and protection adviser at Xpress Mortgages, said it all comes down to sustainability. Lenders want to know how likely the borrower is to maintain their occupation and income for the mortgage term.

She noted that newly-qualified teachers fall into the category of contractor. With most lenders looking for a track record in order to prove sustainability, this presents a problem. 

Green said: “As the academic year is not a full calendar year, the salary is often split between the months worked, rather than an annualised salary paid monthly, so there are some months, usually over summer, where there is no salary credit; this in itself is enough for some lenders not to consider the income as they need you to prove regular, consistent income.”


Seeing the funny side

David Sheppard, managing director of Perception Finance, said that too often city workers in London suffer because their bonuses surpass their basic salary. Yet some lenders ignore bonuses above basic element.

Sheppard spoke of issues with professional comedians, particularly if their latest year figures are higher due to touring because thats unlikely to be a regular annual occurrence.

He said: “Thankfully with comedians a lot of the income now derives from television work, which is year round, so that has relaxed the problems for most lenders. But once they start to get this work the incomes naturally do rise fast, and that can bring about questions regarding the likelihood that the higher income is sustainable. 

“This can normally be overcome due to the higher profile of the client and common-sense underwriting,” Sheppard added.

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