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A time to embrace self-employed income
New data displays the challenging realities facing borrowers, especially for the self-employed. However, Foundation can provide a path to homeownership for these individuals, outside of the mainstream.
Transformation
Times where self-employed borrowers are classed as a complex income outlier are gone. The rise of the gig economy, changing work habits and outlooks, in addition to rising living costs across the board are all factors which have – either through choice or necessity - encouraged a growing number of people to look beyond a more ‘traditional’ employment status and to also seek additional sources of income. Factors which forward-thinking lenders are recognising and acting upon. Have a look at our residential product guides to see how Foundation can help your clients with complex or unusual income sources.
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Customisation
The needs of the self-employed population have often been deemed to be beyond these stricter, automated underwriting boundaries, mainly due to the ‘riskier’ and fluctuating nature of their revenue stream(s). There is there is no great difference between the structure of the actual mortgage offered to self-employed clients compared to those who are employed. The difference comes in how the loans are assessed and how businesses are structured. Different businesses have varying strategies when it comes to things like cash flow, managing balance sheets, and in terms of how they distribute profits and dividends, so it is important that lenders are able to assess each application on its own individual merits and look beyond a more ‘basic’ overview of incomes and creditworthiness for such borrowers.
Data
Recent data from Indeed Flex which outlined that almost a third of UK homeowners (30%) are picking up extra work to boost their savings ahead of their mortgage repayments increasing. Rather than waiting to see how much their savings will be hit, nearly a third of homeowners (30%) due to remortgage in the next 12 months are already making extra money by doing additional shifts or taking on side hustles — including temporary work — to shore up their finances.
Three in ten of those taking on extra work are aged 25-34. This demographic is typically newer to the housing market, meaning repayment rates are likely to be higher compared with older owner-occupiers. Roughly a tenth (11%) of those aged between 55 to 64 are also pursuing additional employment to cover increased repayment costs.
See how much your clients could borrow with our affordability calculator.
How Foundation can help
This data highlights some of the financial realities facing existing and potential borrowers in what remains a challenging financial climate for many. And this is where Foundation’s specialist residential solutions, which incorporate a manual underwriting approach can help embrace the all-important self-employed population and those with complex incomes to have access to responsible and competitive products which match their homeownership aspirations.
*This article was originally published on Financial Reporter
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