The Intermediary – April 2025 - Flipbook - Page 13
RESIDENTIAL
Opinion
Supporting buyers
with non-standard
income
I
n a recent report, UK
Finance predicted a gradual
improvement in mortgage
affordability throughout 2025.
It said lower inflation, rising
real wages and gradual cuts
in mortgage offer rates meant the
market showed greater than expected
resilience throughout last year.
One of the reasons given for that
resilience was “extensive lender
forbearance,” and there’s no denying
that we’ve seen the industry rally to
keep the market moving and dreams
of homeownership alive.
However, we’re by no means
out of the woods when it comes to
affordability, and as lenders, we can’t
take our foot off the gas.
The latest Nationwide House Price
Index shows a prospective buyer on the
average UK income, buying a typical
first property with a 20% deposit,
would have a monthly mortgage
payment equivalent to 36% of their
take home pay. This is above the longtime average of 30%.
House prices remain high relative to
earnings, with a first-time buyer price
to earnings ratio of 5, well above the
long run average of 3.9.
From our own experiences,
affordability is still one of the main
reasons for applications being
declined. So, we need to continue
identifying the barriers to securing
a mortgage and addressing them
where we can.
We did a lot of work on this last year
by talking to brokers, monitoring
trends and analysing data to make
sure we fully understood where the
main affordability challenges lie.
We changed criteria, reduced fees,
launched new products and entered
new areas of lending.
Using all that information, we’ve
focused our proposition on four core
CLAIRE ASKHAM
is head of mortgage sales
at Buckinghamshire
Building Society
areas of lending that reflect the main
solutions we offer to the most common
challenges faced by borrowers today.
Along with first-time buyers and
helping clients revive and rebuild their
credit, we also specialise in helping
applicants with non-standard income.
Complex employment
For a whole multitude of reasons,
people’s employment statuses are not
as straightforward as they perhaps
once were.
The rising living costs of recent
years have been a significant
contributing factor, as people have
sought new and additional ways to
make ends meet.
A recent survey by Finder suggested
that 39% of Brits have at least one side
hustle – which includes a second job
or business – in 2025. This percentage
increases as you go down the
generations, rising to 61% of Gen Z.
There are many other income
streams and employment types that
don’t always tick the boxes.
If you take an employment quirk
and then add another factor, such as a
credit blip or debt management plan,
the chances of meeting criteria narrow
even further.
Tick-boxes
We know from broker feedback
and the cases we look at, that there
are many people who don’t tick the
standard income boxes, but who
would be able to afford a mortgage.
That’s why we are as flexible as
possible when it comes to nonstandard income. We also made some
changes last year to further bolster the
list of scenarios we can consider.
Income such as second jobs, bonus,
commission, overtime, self-employed
(two years income evidence), up to
100% of town allowance (including
We need to continue
identifying the barriers
to securing a mortgage
and addressing them
where we can”
and beyond London), up to 100% car
allowance, multiple income streams
(employed and self-employed),
contract workers on a day rate, CIS
workers, net profit and salary where
the applicants are 100% shareholders
in a limited company, sole trader to
limited company change of status, and
many more.
Brokers can find the terms of those
on our website, but the overriding
aim is to ensure our offer reflects the
genuine needs of today’s homebuyers
and homemovers.
Even when the income isn’t yet quite
at the level needed for affordability,
other things might come into
play, such as a Joint Borrower Sole
Proprietor (JBSP) option.
Non-standard income plus a credit
blip doesn’t always mean the end of
someone’s homeownership dreams.
The main thing we advise brokers to
do if they have a non-standard income
application is to get in touch with
the right lender.
A bespoke, manually underwrien
lending approach will consider
each case individually, with the
aim of creating more pathways to
homeownership for clients who may
struggle to meet traditional high street
lending criteria. ●
April 2025 | The Intermediary
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