IMLA: 88% of lenders will lend to self-employed

Jake Carter

October 26, 2021

self-employed division

An estimated 88% of mortgage lenders will lend to self-employed mortgage applicants, according to research conducted by the Intermediary Mortgage Lenders Association (IMLA).

As well as this, 71% will lend to borrowers with irregular incomes, 63% cater to people seeking multiple borrower products and around half (46%) will consider those with credit impairments.

The IMLA findings also revealed that in order to better cater for self-employed individuals, lenders have adapted their product ranges and criteria expectations to account for the impact which the pandemic has had on the finances of existing and prospective borrowers.

Around one in five lenders (16%) have reduced the period for which self-employed borrowers need to show earnings.

Previously, these borrowers would have been asked to show between two and three years’ accounts, but now 21% of lenders will disregard the 2020/21 tax year for applicants and accept pre-COVID accounts, and 25% will accept predicted revenues for these applicants.

A fifth (21%) of lenders have amended their criteria to support borrowers who have relied on furlough income, or those who have accessed a payment deferral.

Around a third (29%) have also amended their criteria to allow borrowers to declare bonus, overtime, or commission income.

Since the start of the pandemic, 87% of mortgage lenders have responded to the increase in applications from applicants with complex financial circumstances by changing their mortgage options and criteria requirements.

More than two-thirds (67%) of lenders have increased the size of their underwriting teams so that they can manually process applications and 42% have expanded their wider team.

Almost half (46%) have invested in technology aimed at improving the way they process customer applications.

Kate Davies, executive director at IMLA, said: “2020 was the year everything was turned upside down – including the mortgage sector.

“Lenders and intermediaries responded very well given the difficult circumstances and were able, in a remarkably short timescale, to continue to offer support and services to customers.

“This included millions who accessed payment holidays.

“This meant that, for a brief period, the range of mortgages offered needed to be reduced, but lenders are back in business with a full and very competitive range of products back on the market.

“Lenders are also very aware that, as we emerge from the worst of the crisis, borrowers who may previously have had non-standard financial circumstances may now have even more complex profiles.

“Lenders have responded to this – and there are now around 5,000 mortgage products on the market.

“The best way of securing the right deal is to explore the full range of options – by seeking advice from an experienced mortgage adviser, who can provide access to a wide range of lenders, whether those are familiar high-street names, or specialist providers of whom borrowers may not be aware.

“All mortgage lenders are regulated in the same way and must comply with high standards of conduct and governance – which means that borrowers can deal with them with complete confidence.

“Some borrowers may find that their circumstances do not make them eligible for the cheapest loans on the market, but that does not mean that they can’t access an affordable deal which suits their circumstances and will enable them to achieve their ambition of home ownership.”

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