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Self-employed find it tougher to achieve requested loan sizes – MBT

  • 22/02/2021
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Self-employed find it tougher to achieve requested loan sizes – MBT
At least one lender met the loan requirements for self-employed applicants on 71 per cent of cases in January, according to the latest Mortgage Broker Tools (MBT) affordability index.


This was flat compared to December but a steady rise from April where applicants receiving requested loan amounts varied between 61 and 67 per cent. This suggested more lenders have been meeting the borrowing needs of self-employed applicants. 

A quarter of cases in January were deemed unaffordable based on the clients’ required loan amounts while lenders were unable to lend on two per cent of cases. 


Other borrowers better served

Although an increasing number of requested self-employed loans were approved, this was still below the market average.  

In January, lenders were able to meet the loan requirements of 80 per cent of all mortgage cases, with 86 per cent of first-time buyers and remortgage customers respectively obtaining their requested amounts. For home movers, this represented 82 per cent of cases. 

The average maximum loan size offered to self-employed applicants was £221,400 in January, a three per cent decrease from its peak in August. The minimum loan size was £118,000, 45 per cent higher than its lowest point in April. 

Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “The latest MBT Affordability Gap data confirms that it is more difficult for self-employed clients to achieve their requested loan size, but that it is still possible, with the right research.” 


Widening searches 

Toumadj added: “There is a clear warning for brokers within the data. On the cases where there were no options available based on affordability, the difference between the loan requested and maximum loan offered was 25 per cent and this is the highest level we have known in any category since records began. 

“For brokers who only try one or two lenders, this can give a false impression that they will not be able to achieve the required loan amount, even though they data says they probably will be able to do so if they shop around.” 

“This is why whole of market affordability research is essential in helping brokers secure the best outcomes for their clients, especially self-employed clients where calculations can be more complex and more varied,” she said. 


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