Self-employed ‘jumping through hoops’ to get onto property ladder

Online mortgage broker, Trussle, has urged self-employed mortgage applicants to make sure details and accounts are kept up-to-date, after suggesting they have to “jump through extra hoops” to get onto the property ladder.

This comes in response to recent moves by lenders to tighten their criteria for self-employed applicants.

Last week, Santander revealed it was limiting its mortgage products to 60% LTV for those who are self-employed as a temporary measure.

Based on the average house price in the UK, however, Trussle highlighted that the 40% deposit required by self-employed mortgage applicants is equivalent to £98,000 – a figure that the broker’s head of mortgages, Miles Robinson, described as “astonishing”.

“Self-employed people have always had to jump through extra hoops to get onto the property ladder to prove they’re not a risk to mortgage lenders,” Robinson said.

“Those in permanent employment usually have their income assessed on their latest three months’ payslips. For the self-employed, it’s typically two or more years’ of accounts and income, bank statements, proof of address and identification. Add to this the impact of the coronavirus pandemic, and lenders are scrutinising applications in more detail than ever.

“If you’re self-employed and applying for a mortgage, make sure your details and accounts are kept up-to-date and in order, this will help avoid any issues that could delay or prevent you from getting your mortgage approved.”

Trussle also suggested that self-employed mortgage applicants should consider whether the potential financial support available to them through the government’s Self-Employment Income Support Scheme is a “necessity”.

“Lenders assess self-employed people using an average of two years income, so taking out a loan could affect your ability to obtain a mortgage in the future,” Robinson added. “Mortgage products and lending criteria are changing constantly, so seek professional advice from a mortgage broker to see what options are available to you.

“In the current climate, there’s no doubt that the market is challenging for the self-employed and it’s crucial that the government and the industry supports this group as they embark on their home ownership journey.”

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