Self-employed individuals have been disproportionately impacted by the COVID-19 crisis, according to Steve Seal (pictured), managing director of Bluestone Mortgages.
Seal noted that many in this demographic are now facing significant challenges when it comes to securing a mortgage.
He said: “In normal conditions, lenders often use the most recent year’s accounts to determine affordability for a self-employed applicant.
“However, the onset of COVID-19 has meant that lenders are having to assess applications from self-employed customers in new ways, with some asking for the previous year’s trading statements instead.”
As a result, Seal believes that brokers should always consider working with a specialist lender, particularly where a client’s income has taken a hit during the crisis.
He added: “Specialist lenders have the capacity and expertise to support borrowers with atypical financial histories, and can tailor a mortgage to suit a customer’s specific needs and circumstances.
“Lender support teams can also be very useful for advisers working with self-employed clients, as they can help to determine the exact support that is available to the borrower involved.”
Lisa Martin, development director at TMA Club, agreed: “Even with the government support granted to self-employed workers during the pandemic, many are now in a much more precarious position when it comes to accessing lending.”
She said that for many self-employed borrowers, the best option is a specialist lender that is experienced in providing mortgages to those in complex or non-standard financial circumstances.
Martin said: “Many regional building societies can also cater to these individuals, given their ability to manually underwrite cases.
“It is crucial that advisers consider lenders like these when working with self-employed clients, so that more individuals in this community are aware of the financing available to them.”
Jonathan Stinton, head of intermediary relationships at Coventry for Intermediaries, said there is an increasing number options available to the self-employed.
He said: “As we emerge from the pandemic, we are now seeing increased options for self-employed customers, though policies vary amongst lenders.
“Even so, lenders’ shifting criteria coupled with the changing circumstances of many self-employed customers makes it challenging for them to find the best solution.”
He believes this is where intermediaries will play a key role in helping these clients navigate the current market and find the right mortgage for their individual situations.
Stinton said: “Intermediaries are best placed to provide valuable advice on the range of options available and help clients to position themselves favourably in front of the right lenders.”
He pointed to the use of offset and interest-only mortgages, as viable alternatives for self-employed clients.
Martin added: “Advisers need to make these individuals aware that specialist lenders and building societies are on hand to cater to a wide variety of circumstances, and that each case will always be considered on its own merits.”