With almost five million self-employed workers in the UK, according to the Halifax, and almost 40 per cent of employment growth coming from the self-employed or small business owners over the last decade, self-employed borrowers should be big business for lenders. However, this sector has been poorly represented and supported by banks for some time.
The good news is that the situation is changing with the availability of mortgage options for the self-employed improving in recent months. Halifax is the latest lender to act, reducing the income information required for self-employed customers from three to two years.
The main issue for lenders has been a general lack of understanding regarding the way that the self-employed take their income and minimise unnecessary personal tax. However, lenders are upping their game, recognising that the self-employed are heavily invested in their businesses and therefore represent a low risk to them.
A handful of lenders are catering well for the self-employed, such as Kensington, Coventry Building Society, Metro and Santander. The key areas where underwriting has improved centre on recognising all forms of income i.e. salary, dividend, retained profits in the business.
So whether you have just one year’s accounts, an accountant’s reference, are a lawyer or doctor buying into a practice or are becoming self-employed or becoming a member of a limited liability partnership (LLP), there should be a lender who can help. Get in touch for more information.