Through its intermediary-only arm, Yorkshire Building Society has cut the number of years accounts self-employed borrowers must supply from three to two.
Nicola Alvarez, corporate account manager, proposition development, said: “We know the UK workforce is evolving and with one in seven people currently self-employed, it was clear we had to update our policies to reflect the changing employment trends and differing types of borrowers.”
Accord said it had always reviewed applications on a case-by-case basis to make sure borrowers’ income was sustainable, but a formal change in its criteria gave brokers certainty over the documents required for a self-employed case.
Ms Alvarez added: “Moving from three to two years’ evidence, along with our offering for fixed term and day-rate contractors, means we’re now able to support a much broader range of customers.”
More common sense needed
Dominik Lipnicki, managing director of Your Mortgage Decisions, said Accord’s change brought it in line with other lenders but there was still a long way to go before self-employed borrowers will adequately served by the banks.
“I still believe that lenders are slow to alter their self-employed lending criteria,” he added. “I would welcome more lenders taking a common sense approach to the self-employed borrower, such as declining profits and start-ups.
“Too often, I still get the feeling that the big players in the market want the same borrower with easily provable income and an impeccable credit history. We have seen a race to the bottom when it comes to rates but for many self-employed people it is criteria that needs changing to ensure that it caters for the way our clients work and get paid in 2019.”
Accord has separate criteria for borrowers on fixed-term and day-rate contracts.
Fixed-term contractors must have at least 12 months remaining on their current contract or if there is less than 12 months left on the contract they must have a two-year track record of income from the contract work.
Day-rate contractors can use a maximum of 46 weeks income from their current contact and there can be no more than an eight week gap between contracts in the last 12 months. They must earn a minimum of £300 a day or £50,000 a year.
Andrew Montlake, managing director, Coreco, said: “We need to see more lenders understand how people choose to work these days and I think looking forward further still, work will be much more fluid rather than the traditional “one job” working. People want to be more flexible, will change jobs more frequently and we will see more freelancers and contractors.
“We need to see more understanding from lenders around this and I would like to see all lenders offering solutions for the newly self-employed and contractors.”
Last week Mortgage Solutions reported that TSB was gearing up to improve its self employed lending criteria. A spokesperson said that lenders needed to respond to the changes in the way people work.