You are here: Home - News -

Newly self-employed rush to take advantage of relaxed mortgage criteria – Knowledge Bank

  • 11/10/2021
  • 0
Newly self-employed rush to take advantage of relaxed mortgage criteria – Knowledge Bank
Brokers are working with a significant amount number of self-employed borrowers with just one year's worth of accounts, research from Knowledge Bank has revealed.


This rush of self-employed applicants may be as a result of lenders recently softening the criteria for freelancers, with a number of lenders, including Natwest and Halifax, now accepting borrowers who have used the Self-Employed Income Support Scheme (SEISS).

These results come from Knowledge Bank’s criteria tracker for September. The tracker said the number of searches for ‘self-employed – one year’s accounts’ was a strong indication of the clients brokers were seeing.

Despite the number of self-employed people in the UK falling by roughly 700,000 in the year following the first lockdown, according to Statista, there has been a slight increase in the past few months.


Most searched for terms in September

Also in the residential market, brokers were working with a number of clients who had chequered financial histories. ‘Defaults’ featured twice in the five most-searched terms in September including ‘defaults registered in the past three years’ and ‘defaults registered over three years ago’.

Financial difficulties have been a trend for the past six months, with at least one term such as ‘missed payments’ or ‘defaults’ featuring in the most-searched terms in the residential arena since March.

In September, borrowers were also looking to use second charge mortgages to help ease financial pressure. ‘Capital raising for debt consolidation’ was amongst the most-searched terms by brokers looking for second charge products.


The bridging market

Searches made by brokers working in the bridging market showed that ‘second charge loans’ appeared in the most-searched terms for the first-time since February 2021.

Matthew Corker, operations director at Knowledge Bank said: “Lenders are understandably being cautious with borrowers with just one year of accounts. Most industries have been impacted to some degree by the various lockdowns, so untangling whether income is sustainable and a reliable indicator of future performance has been difficult.

“Lenders are relaxing restrictions slowly, however, there is still some way to go for self-employed applicants before they are afforded the same variety of choices they had prior to the pandemic.

“Outside of the self-employed market, with the stamp duty holiday ending at the end of September, a clearer picture of the mortgage market is coming into focus. One area that sadly looks set to stay is financial difficulties. The pandemic certainly impacted people’s finances, and searches connected to defaults and debt consolidation look set to continue.

“Another constant from the pandemic that is certain to continue is the vast number of criteria changes – there have been a remarkable 37,214 changes so far this year. With the continual stream of criteria changes, brokers do not have time to spend hours every day on the phone to lenders and updating spreadsheets with the latest criteria.”

There are 0 Comment(s)

You may also be interested in