71% of self-employed mortgage cases found to be affordable

There is currently at least one lender available to meet the loan requirements of self-employment mortgage applicants for 71% of cases, data from Mortgage Broker Tools (MBT) has found.

The latest MBT Affordability Gap data from January found that 71% of self-employed cases processed through MBT Affordability were affordable, while 27% were deemed to be unaffordable based on the clients’ required loan amount. Lenders were unable to lend on just 2% of cases.

Data from the MBT Affordability Index also revealed earlier this month that the average maximum loan offered to self-employed mortgage applicants in January was £221,400 – a fall of just over 3% from its peak last August – while the minimum average loan available to the self-employed also recovered to £118,800.

The affordability and criteria platform stated that this represents an increase of 45% on its lowest point, which was last April, and a rise of just over 43% on November.

However, MBT also suggested it is still “markedly more difficult” for self-employed customers to achieve their requested loan size than employed customers.

While 71% of self-employed cases were found to be affordable, 80% of cases across the whole of the market were affordable in January, which was up from 76% in December.

The findings showed there was at least one lender able to meet the loan requirements of 86% of first-time buyers and 86% of remortgage customers, while 82% of home mover cases were found to be affordable.

MBT CEO, Tanya Toumadj, commented: “The latest MBT Affordability Gap data confirms that it is more difficult for self-employed clients to achieve their requested loan size, but that it is still possible, with the right research.

“There is a clear warning for brokers within the data. On the cases where there were no options available based on affordability, the difference between the loan requested and maximum loan offered was 25% and this is the highest level we have known in any category since records began.

“For brokers who only try one or two lenders, this can give a false impression that they will not be able to achieve the required loan amount, even though the data says they probably will be able to do so if they shop around.

“This is why whole of market affordability research is essential in helping brokers secure the best outcomes for their clients, especially self-employed clients where calculations can be more complex and more varied.”

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