Speaking at Knowledge Bank’s Criteria Clinic webinar on Tuesday, Matt McCullough, national sales manager at Aldermore Bank said as brokers were on the frontline of cases, it was up to them to ensure a client’s application had sufficient information to be accepted.
“It’s all about the quality of the case that comes in from the broker.
“Because if we know that upfront, we don’t have to ask any questions and an underwriter is not assuming that someone’s in a potentially difficult place,” McCullough added.
Referring to a self-employed borrower who took on a second job as a stop gap while he stopped trading, McCullough said although the additional income was not used for affordability, the information helped to support the client’s overall financial strength.
He added: “The case wasn’t reliant on the additional income itself, but a lot of lenders would have said, ‘you’ve stopped trading so we can’t lend to you at all’.”
As the current situation with many borrowers is so fluid, lenders said an update on the client’s circumstances may be required before completion.
McCullough said the application would be based on how it was presented at the offer stage, but where the income has not been reviewed for 30 days Aldermore could ask for extra documentation in case the offer needs to be extended.
Peter Caldicott, key account manager at Principality Building Society, said if no change is confirmed, the application will proceed as normal but a letter stating a return to work would provide “comfort” to the lender.
Meanwhile, Janet Frame, business development manager for the north at The Nottingham Building Society said it would potentially ask for the borrower’s first payslip once they have returned to work to confirm conditions were the same.
Once furlough ends
Referring to data from the Office for Budget Responsibility which suggested 1.4 million furloughed workers may not return to work at all, Caldicott said an eye needed to be kept on this.
He said this was “unchartered territory” making it difficult for all lenders to predict how they would approach furloughed borrowers in October.
“There’s lots of positive signs alongside some negatives. It would be foolish of me to make any predictions as to where we’re going to be or what our appetite would be like.
“We will try to do the best for our members and brokers and be there, but lending sensibly to the right types of customers,” he added.
Jane Atkins, business development manager at Kensington Mortgages also said lenders would want to lend responsibly but added there was a risk of dropped transactions in the market as borrowers decide not to continue with applications if their job and finances remain uncertain.
Chairing the webinar, Nicola Firth, founder and director of Knowledge Bank, added: “One thing that should be on every broker’s fact find is a question around future income.
“So, asking each applicant if they anticipate any changes to future income because that might bring [any problems] out to the forefront as well.”