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Self-employed borrowers most underserved by lenders, say brokers

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  • 30/04/2015
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Self-employed borrowers most underserved by lenders, say brokers
The mortgage lending market is failing to serve the needs of self-employed customers according to 63% of brokers, a Mortgage Solutions poll finds.

Just 7% of respondents said underserved borrowers in the mortgage market were those looking to remortgage followed by interest only, where 30% of brokers believed lenders were falling short of clients’ needs.

Dale Jannels, managing director, All Types of Mortgages (AToM), said self-employed mortgage applicants had experienced a ‘tough time’ over recent years and was not surprised by the results.

“With a reported 1,239 people being made redundant daily and unable to find new employment, it’s hardly surprising that so many have become self-employed. But despite the demand being huge, only a small number of lenders are looking to help those who have recently become self-employed.

“What’s more, the majority of those lenders looking to assist customers with less than two years submitted accounts are in the specialist sector. In some cases, those lenders may not be known to the broker, let alone the end consumer,” he added.

Jannels said interest only and self-employed customers had similar struggles when it came to pinning down a mortgage application.

“In the main, unless you earn a substantial amount of money and have a large amount of equity in the property, you will struggle to achieve an interest-only loan. This doesn’t necessarily hit those new to mortgages. But it really does hit home hard to those who have an interest-only mortgage, have gone on to the lender’s SVR and are now looking to remortgage on similar terms.”

Legal & General Mortgage Club director Jeremy Duncombe added that lenders should steer their focus away from the norm of 60% loan-to-value products to support underserved customers.

Brokers should also play a role in ensuring that customers are made aware of the opportunities in the remortgage market, he said.

“Customers will spend several hours to save themselves £100 a year on their house insurance, but could give themselves a £3,000 pay rise by spending the same amount of time with a broker discussing their remortgage.

“Brokers and lenders have a unique opportunity to work together to provide solutions to these underserved borrowers,” Duncombe said.

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