Mortgage lenders turn against self-employed workers even if they have healthy incomes
Self-employed workers with healthy incomes are having mortgage applications unfairly rejected, experts warn.
Banks are imposing stricter checks on anyone who works for themselves due to fears their finances could take a hit due to the pandemic.
But brokers say viable borrowers are being frozen out of deals.
Banks are imposing stricter checks on anyone who works for themselves due to fears their finances could take a hit due to the pandemic
Some lenders are refusing to take bonus or overtime income into account, while others are rejecting all applicants who are self-employed.
Andrew Montlake, of Coreco, says it doesn’t make sense to ‘paint everyone with the same brush’.
He adds: ‘We are seeing more relatively strange decisions on applications that would have flown through before the pandemic hit.’
He says one ‘worrying trend’ is lenders refusing applications based on hearsay. For example, one lender didn’t take a worker’s bonus into account based on an old article they read involving his firm.
Mr Montlake says Coreco has worked with famous musicians and film directors who have been rejected despite having plenty of work in the offing.
Rachel Dixon, mortgage adviser at RH Dixon, says two self-employed clients have been rebuffed in the past week.
A UK Finance spokesman says lenders will adopt different approaches based on their risk appetite and consider a range of factors including employment status, sector and payments.
It comes as banks flock back to first-time buyers by reintroducing a range of low deposit mortgages. NatWest was the latest lender to relaunch 90 pc deals for first-time buyers on Monday.