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Majority of lenders will accept self-employed and complex income – IMLA

  • 26/10/2021
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Majority of lenders will accept self-employed and complex income – IMLA
Most lenders will accept applications from self-employed borrowers and those with complex income, despite preconceptions during the pandemic that lending had become more restrictive.


According to the latest research from the Intermediary Mortgage Lenders Association (IMLA), which surveyed 24 mortgage providers, 88 per cent said that they would accept applications from self-employed borrowers.

Around 71 per cent said they would consider those with irregular incomes and 63 per cent said they would accept people searching for multiple borrower products, like joint borrower sole proprietor mortgages. Some 46 per cent said those with credit impairments would be considered.

During the pandemic, some lenders tightened their criteria to limit riskier borrowing, which led to concerns that applicants with non-standard financial circumstances would be unable to borrow.

However, this research shows that most lenders will lend to applicants with more complex needs and income.


Flexible criteria

IMLA’s research found that one in five lenders had reduced the period for which self-employed borrowers needed to show earnings.

Self-employed borrowers typically would have to show two to three years’ accounts, but around 21 per cent of lenders say they will not include the 2020/2021 tax year for applicants and they would accept pre-Covid accounts.

A quarter said they would accept predicted revenues for self-employed borrowers, which could allow them to borrow more.

A fifth of lenders said they would support borrowers who used furlough income or taken payment deferrals.

This is followed by nearly a third who have changed their criteria to allow borrowers to use bonus, overtime and commission income.

During the pandemic the use of extra earnings in applications was curtailed to protect applicants whose income were disrupted. The report said improving economic outlook has returned many to pre-crisis earning levels.


Investment in systems

The report also found that most lenders had grown their teams and invested in technology to meet growing and changing demand.

Over two thirds of lenders have expanded their underwriting teams so that they can manually process applications.

Just under half have grown their wider team and invested in technology to to improve customer application processing.

Kate Davies (pictured), IMLA’s executive director, said that 2020 was the year “everything was turned upside down” and lenders and intermediaries responded well given exceptional circumstances.

She said that for a brief period, the number of mortgages offered needed to be reduced but now lenders were “back in business with a full and very competitive range of products back on the market”.

She added: “Lenders are also very aware that, as we emerge from the worst of the crisis, borrowers who may previously have had non-standard financial circumstances may now have even more complex profiles. Lenders have responded to this, and there are now around 5,000 mortgage products on the market.

“The best way of securing the right deal is to explore the full range of options – by seeking advice from an experienced mortgage adviser, who can provide access to a wide range of lenders, whether those are familiar high-street names, or specialist providers of whom borrowers may not be aware.”

She said that all mortgage lenders were regulated and had to comply with standards of conduct and governance, so borrowers could deal with them with “complete confidence”.

She added that whilst some borrowers may not be eligible for the cheapest loans it didn’t mean they couldn’t accept affordable deals that suit their circumstances.


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