The Intermediary – May 2025 - Flipbook - Page 39
RESIDENTIAL
Opinion
Prioritise lenders
with inclusive selfemployed criteria
T
he workforce is
changing fast, and
mortgage lenders are
having to accommodate
that change. The selfemployed now account
for around 12% of the labour market,
with more than four million people
working for themselves. Nevertheless,
many mortgage lenders continue to
apply rigid, outdated criteria that fails
to reflect the diversity and reality of
self-employed incomes.
Twenty7Tec recently reported
a record of more than one million
adviser searches for self-employed
mortgages last year, up 7.5% annually.
However, despite modestly rising
business confidence according to
Federation of Small Business (FSB)
data, just 50% of those who applied
for credit of any kind had their
applications approved.
The message that small business
owners are an under-served market
is not new. But the idea that advisers
who can connect self-employed clients
to lenders offering genuinely flexible
criteria could rapidly expand their
businesses might be.
Taking back control
The increase in demand for selfemployed mortgages reflects a
wider societal shi towards flexible,
entrepreneurial working paerns. In
a post-pandemic world, individuals
are increasingly starting their own
businesses, or opting for freelance,
contract, or consultancy roles.
However, many mainstream lenders
continue to apply lending criteria
that remains out of step with these
employment models.
Common barriers faced by selfemployed borrowers include the
requirement to provide two or
three years’ worth of full accounts
or SA302s, and restrictive income
assessments that oen ignore
dividends, retained profits, or
contract earnings.
Some lenders also continue to
rely on automated credit scoring
systems that leave lile room for
understanding a client’s complex
financial circumstances.
This approach excludes many
credit-worthy borrowers, simply
because their income does not fit
into the traditional, salaried mould.
Many successful consultants, IT
contractors, or small business owners
have fluctuating incomes that,
despite variability, easily support
mortgage affordability.
Expert support
It’s critical to take a nuanced
approach to self-employed
borrowers. The cornerstone of our
offering, for example, is manual
underwriting, ensuring each
application is assessed individually
by people who understand business
performance, income dynamics, and
entrepreneurial realities.
We accept one year’s accounts
and, in certain circumstances,
even accountant projections. This
flexibility ensures the newly selfemployed, new business owners or
those experiencing rapid growth are
not unfairly penalised.
Advisers should continue to
choose lenders that consider a wide
range of income sources during the
underwriting process, including
dividends, contract rates, bonuses,
overtime, investment income, and
net profits.
The business case
Our approach ensures our adviser
partners can serve a wider variety
of clients with tailored mortgage
LAURA SNEDDON
is head of mortgage sales and
distribution at Hinckley &
Rugby for Intermediaries
solutions. This is important,
because we’re acutely aware that
successfully securing mortgages for
self-employed clients leads to higher
client satisfaction and loyalty. These
clients are oen highly networked and
willing to refer others.
Differentiating your business by
confidently placing complex selfemployed cases also creates a stronger
brand in a competitive marketplace.
As the self-employed sector expands,
advisers who understand and embrace
this segment will be positioned
to capture a larger share of future
mortgage business.
It also drives repeat business, as once
you successfully assist a self-employed
client with a mortgage, they are likely
to return for future borrowing needs.
These clients are not square pegs
who need to be forced into round
holes. The lenders that work for this
group of professionals offer manual
case handling, underwriting, and the
expertise to recognise strong financial
profiles that simply do not conform to
outdated assessment models.
We offer advisers access to our credit
commiee for trickier cases, and
strive to return a same-day decision.
In each case, we aim to answer ‘yes’
rather than defaulting to ‘no’.
The future market will be shaped
by inclusivity, flexibility, and a beer
understanding of diverse income
streams. The growing self-employed
sector is a vital part of that future.
Advisers who adapt now, prioritising
lenders that champion manual
underwriting and personalised
service, will not only meet today’s
needs but thrive in tomorrow’s
mortgage environment. ●
May 2025 | The Intermediary
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