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Leicestershire mortgage firm warns Covid lockdown is creating a challenging borrowing market for self-employed and furloughed workers

Leicestershire mortgage firm warns Covid lockdown is creating a challenging borrowing market for self-employed and furloughed workers

Lenders are increasingly turning down mortgage applications from self-employed people, those who have been furloughed and people who work in the hospitality or tourism trade as the squeeze on the country’s finances continues to tighten.

So says Leicestershire mortgage company Mortgage Experts Online, where staff are having to spread the net wider to find lenders willing to take on would-be house-buyers whose occupations have been the most affected by the economic downturn.

Foremost in the firing line are self-employed people who face a mixed picture when it comes to their mortgage application being accepted, says Lee Griffiths, a director at Mortgage Experts Online, which is based in Station Road, Castle Donington.

While some lenders are now offering smaller loans and are capping the amount of loan-to-value (LTV) deals to self-employed applicants compared to those who are employed, while they are also facing more stringent checks on affordability and the viability of future earnings.

Others, such as Metro Bank, are now requiring six months’ worth of bank statements from self-employed applicants, having previously only required three months’ worth.

Anyone who has been furloughed, meanwhile, will need to return to work and then show their latest one-month payslip demonstrating that they are earning at the same pre-Covid level.

Elsewhere, some lenders are simply ceased considering applications from anybody working in the hospitality or tourism trade.

Lee said:

“There has been a lot of concern about the way in which self-employed applicants are being treated and understandably. While many self-employed people are undoubtedly struggling, there are many who are continuing to earn during the pandemic and those whose income has actually increased.

“Everyone accepts that lenders are businesses, so it is no surprise that they are taking steps to limit the risks they take, but in some cases they are making things unnecessarily difficult for self-employed people at a time of uncertainty.

“We would always recommend that people visit an independent broker who can access the whole market, but we would also urge borrowers to be patient too, because the ongoing pandemic means things change every day.

“We might easily have a situation where a client puts in a mortgage application and things were progressing, only for the area of the country they were living in to go into a higher tier.

“This could result in them being furloughed again or, if they’re self-employed, having no income, leaving the lender no choice but to reject their application through no fault of their own.”

Mortgage Experts Online help buyers all over the UK to find the right mortgage advice and specialises in helping self-employed people, people on reduced-hours or zero-hours contracts, or buyers with poor credit histories.

Mortgage Experts Online’s accredited brokers scour the whole market for mortgages and also specialise in buy-to-let mortgages and commercial finance.

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