Self-employed people must not be locked out of future mortgage borrowing
11 May 2020
The latest UK Finance data shows the extent of the Covid-19 pandemic hitting the mortgage market with one in seven mortgage holders having been granted a three-month grace period by the 28 April.
While the data has not been broken down in this way – yet – it would be interesting to see how many of those borrowers securing a payment break were self-employed and how many requested their holiday while the government was still coming up with its self-employed income support scheme?
You will recall it took roughly a week longer to develop a scheme designed to provide parity between the employed and self-employed, although there has still been criticism that there are large numbers of the latter group who will not be eligible for the support.
Fears for finances
As might be expected there tends to be a greater level of complication here for the self-employed, and this is not just the case when it comes to their tax affairs, their income, the way they are paid, or indeed the route by which government can provide greater levels of support.
It is also there in the ways and means by which they borrow and how they are accepted for loans and mortgages.
So it is perhaps not surprising the Association of Independent Professionals and the Self-Employed found almost half of those self-employed people it questioned said they feared not having enough money to cover basic costs such as rent or mortgages and bills.
And two-thirds were worried they would burn through all their savings in the next three months, a similar number to those who had seen demand for their work dropping since the crisis started.
Future mortgage availability
For the self-employed who own their own home, this is not just about the present with regards to ongoing mortgage payments, but how they might be viewed in the future when looking for further mortgage finance.
The big question is, how will lenders review a self-employed person’s 2020/21 income in light of Covid-19, especially if it might look considerable out of step with previous years?
Over the past few years, many specialist lenders have excelled within this part of the market, broadening their offerings, accepting a wider range of self-employed borrowers, and having a flexibility to their criteria which matches the working practices of large numbers of workers.
In the immediate aftermath of the coronavirus, that lending approach is unlikely to be there and it may take many months before we return to anything like the levels of criteria, pricing and underwriting we have come to expect.
Will that specialist lending gap be filled, or can specialist lenders themselves return to market quicker than anticipated?
Do not step back
Perhaps these are conversations for the future, but they will certainly need to be had if we are to ensure that self-employed borrowers are treated fairly and continue to be able to secure their mortgages in the future.
Advisers clearly have a role to play here in terms of leading their self-employed clients through not just this period but into whatever environment follows.
And we will all have to ensure that the great strides that have been made in the area of self-employed mortgage lending in the past few years are not lost.
Maintaining mortgage payments might be the priority now, but maintaining product options and flexible criteria will also be a necessity in the future.

Blog Archive
Lenders have not got to grips with how the pandemic impacted borrowers
05 Mar 2021
Supply needs to match demand
02 Mar 2021
Don't overlook product transfers
19 Feb 2021
Stamp duty debate a black hole
05 Feb 2021
Industry wide levy is a head scratcher
02 Feb 2021
Long-term imposter product may finally become relevant as a high LTV option
29 Jan 2021
Uncertainty continues into 2021
07 Jan 2021
Stay ahead of the fraudsters
21 Dec 2020
Industry change starts with what we do ourselves and within our businesses
11 Dec 2020
Second lockdown will keep lender resource focused on payment deferrals
09 Nov 2020
Is now the right time to add to property portfolios?
08 Sep 2020
Advisers have duty of care as fraudsters step up scam activity
17 Aug 2020
IFAs and mortgage advisers – two sides of the same coin
12 Aug 2020
Brokers need fair play from lenders in high LTV space
31 Jul 2020
Are you ready for lock-stalgia?
03 Jul 2020
Show your clients what you can do
19 Jun 2020
Specialist lenders may need end to self-cert payment holidays to survive
16 Jun 2020
Reading the signals
15 Jun 2020
Is the FCA really in this with us?
28 May 2020
Self-employed people must not be locked out of future mortgage borrowing
11 May 2020
I wish I could say the worst is over
07 Apr 2020
Looking for scintillating letters of recommendation
11 Mar 2020
FCA must answer why it is promoting execution-only
25 Feb 2020
Goodbye doesn’t have to be forever
17 Feb 2020
FCA changes could have harmful consequences
07 Feb 2020
This could be the year of economic stimulation
03 Feb 2020
Putting the cart before the horse
17 Jan 2020
The start of a new decade
15 Jan 2020
The importance of advice
12 Dec 2019
Keep in touch with clients or lose them for good
06 Dec 2019
Later life market still needs work to be fit for purpose
22 Nov 2019
Helping mortgage prisoners
04 Nov 2019
Combatting mortgage fraud
20 Sep 2019
Upping demand for green mortgages
17 Jul 2019
Tory leadership hopefuls are right to be focused on social care in later life
01 Jul 2019
Responding to political messages about the housing market
20 Jun 2019
Promoting execution-only is not treating customers fairly
10 Jun 2019
Changing regulatory permissions can be the making of your business
14 May 2019
If we don’t talk up the market, then who will?
02 May 2019
Deeper product transfer data would show lenders’ market shifts
29 Mar 2019
Mortgage Market Study inconsistencies make for frustrating read
27 Mar 2019
The relationship between lender, broker and borrower
18 Feb 2019
Advisers must not leave mainstream mortgage market to lenders
28 Jan 2019
Let’s not blow Fleet and Secure Trust Bank out of proportion
17 Jan 2019
‘Regulation should not be reworked purely to support automated advisers’
04 Jan 2019