How COVID-19 has effected self employed mortgage applicants
For a lot of self employed people, lockdown halted their work and income came to a standstill. COVID-19 has effected self employed clients in a big way. Now whilst this didn’t happen to everyone, a lot of incomes came to a stop. Working from home became a possibility for some, where others saw income die out as a result of the lockdown.
Mass relief was felt when the government released its self-employed support scheme program to provide funding to the self-employed sector. Whilst not everyone had been fully affected it would seem that most had lost income as a result of COVID-19.
Now, six months down the line and two support scheme payments later, what are lenders making of these self employed clients?
How lenders are changing their approach due to how COVID-19 has effected self employed clients
With lenders bringing in special policies with regards to clients still on furlough, it was only a matter of time before they introduced special policy with regards to the self-employed.
What they are really looking at and scrutinizing is how self-employed clients have been affected since the lockdown was enforced. So this could be whether the grants were taken, if there was a period of non working etc. Each lender will look at situations differently but they all will want to know if the client has been affected and what support they have taken in this time to keep the business alive.
Tips and tricks to avoid being caught by the effect on the self employed
Whereas pre-COVID I could comfortably say that we could look at getting a self employed client lending on their most recent years net profits, this is now proving more difficult. Lenders want to see that trading has continued and if not, they are all looking at ways to which they will penalize or deduct a certain amount from the income to counteract this.
They key is to get professional advice on what to do next. With self employed incomes there is always a sense of a bigger picture and a longer time frame than the employed system. Get with your accountant, speak to your mortgage advisor and plan ahead so you know your self employed income is suitable for the mortgage you want to get.
In this current lending landscape posts are moving daily and weekly. It’s impossible as a retail client to stay up to date with all of these changes in lending policy and criteria. On top of this, the best rates available. Between this you get a whole package of what’s best for you, which is exactly why getting in touch with a professional whole of market mortgage advisor in these times is priceless.
Equity Release plans are not right for everyone and it is important that you fully consider your options and receive independent financial advice before making a decision. It is also important that, if you do decide to use an equity release product, you choose one that meets your needs. Remember that taking an equity release plan is generally a long term option. However, there are flexible plans available that may fit your varying needs and some will allow you to repay in the future without penalties.
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