The latest reader poll by Mortgage Solutions asked: ‘Are lenders doing enough with criteria to accommodate self-employed and contract workers?’
Some 33 per cent responded: ‘No, it’s difficult to place cases’ with a further 38.5 per cent only agreeing that some lenders had it right.
Just 22.9 per cent said there was plenty of choice, while 5.5 per cent of respondents said they did not know.
However, industry commentators were split about whether the responsibility was on lenders or brokers to tackle the situation.
Anita Arch, head of mortgage sales at Saffron Building Society, admitted that self-employed lending could be a “complex area”, adding: “I don’t think many lenders fully understand trading accounts. However, self-employed is a growing segment and you can’t ignore it.”
Chris Sykes, mortgage consultant at Private Finance, said: “The findings of this poll aren’t especially surprising to us, because we can see it from both sides: it’s almost certainly true that placing the cases of self-employed borrowers is more difficult than placing those of the traditionally employed; and its inarguably the case that mainstream lenders could do more to accommodate such borrowers.”
Sykes went on to recognise, however, that with enough knowledge of the specialist lender market, “solutions can be found for the self-employed”.
Carl Shave, director of Just Mortgage Brokers, said that while the results were in part expected, “having a third of respondents indicate that it’s difficult to place cases is perhaps a little surprising”.
He said “much blame” was put onto lenders by some advisers who believed they did not understand self-employed customer’s finances and while some lenders probably do not look beyond tax returns, he said it was “a broker’s role to find the most appropriate lender for their customer’s situation”.
John Yerou, managing director of Freelancer Financials “totally disagreed” with the results adding that despite the current economic and political climate, his company had “never been in a better position to help self-employed clients”.
He said: “Today you can get self-employed people, sole traders and company directors being assessed on just one year’s account, a lot of lenders will accept that it’s just some brokers are not aware.”
Down to broker experience
Andrew Nicolaides, director of Elite Mortgage Finance, said that although lenders were not all “as flexible as they could be with their criteria”, he was still surprised by the figures, as he “would have expected more brokers to have confirmed there was plenty of choice for self-employed applicants.”
“I guess this is down to the experience of the mortgage broker,” he added: “Brokers need to review lenders criteria and update their knowledge.”
Nicolaides said: “Its all about knowing the lender’s criteria and the experience of the broker dealing with the mortgage which could make the difference in obtaining the mortgage offer or not.”
Yerou echoed this as he suggested the reason for the result of the poll was the majority of brokers would be dealing with the ‘vanilla’ market, not be focusing on or not knowing enough about the self-employed segment.
Yerou added: “If you get a firm that specialises in self-employed or have had good experience dealing with that, they know there are good solutions out there.”
Shave reiterated this, saying: “Knowing your market is paramount to giving best advice. Dare I mention that if it was easy for everyone to arrange a mortgage that perhaps there would not be quite so much demand for a broker’s services.”