How to Hub
Nine ways the lender and broker can work to help, not hinder, the self-employed.
Unfortunately, the Covid 19 pandemic affected many Self-Employed business owners and their staff. However, as a specialist lender who underwrites residential cases individually, we have worked hard to apply a risk-based and common-sense approach to manually underwriting these types of borrower, in order to offer the very best criteria and service possible.
Here are some of the ways we currently support your Self-Employed borrowers to continue to help them achieve their mortgage goals.
- Higher loan to value lending
Some lenders capped their LTV limits for Self-Employed customers during the pandemic. However, throughout the pandemic, Foundation did not do so, and in fact, we actually increased it to 90% LTV for residential mortgages and 85% for standard buy to lets (where available in the product range).
- Fair treatment of borrowers impacted by bounce-back loans and furlough
We supported the self-employed further throughout the pandemic by accepting those who had made us of a range of grants and bounce back loans, as well as the employed borrowers who had been furloughed. Now in 2022, we continue to support those customers that were affected during the pandemic, by taking a flexible underwriting approach to their income and by ignoring Limited Company Bounce Back Loan repayments.
- Manual underwriting of applicants whose business income is recovering
We understand that there are many business owners who have only just started to make a profit again after having a year or two of very low incomes, or even losses in some cases. This is why we can use latest years figures for Self-Employed applicants whose Accountant can provide a projection for the following year using our Accountant Certificate.
- Welcoming the self-employed with new businesses
There were many new businesses also set up during the end of the pandemic which have been very profitable, so for those business owners who only have only been trading for 1 year, we can also use their income also. We are one of very few lenders who will consider using Net Profit plus Salary OR Salary plus Dividends in this scenario if we can obtain a projection from their Accountant.
- Maximum age of 75 at end of term for non-manual roles
It isn’t uncommon that some business owners will be in more of an “Admin/Managerial” role as their business becomes more established. If they are in a non-manual labour role (for example have staff working for them) we could consider taking the mortgage term to age 75, with no proof of pension needing to be evidenced.
- New Directors not yet with a full set of books
In the past, you may have come across a customer who has been made a partner in the firm they were previously employed by, and wondered where to place the case as they don’t have a full set of books yet with them as Director. We can help those customers too. In those scenarios we usually work on the previous year’s salary as income and write to the accountant to verify income moving forward in their new role.
- Generous consideration of income for self-employed contractors
Over the past year or two there has been a significant increase in ‘Contractors’ since the changes in IR35, and Foundation Home Loans has a flexible manual underwriting approach to these. We can consider Contractors that have been contracting less than a year, if they have relevant industry experience (ideally 2 years). It’s always recommended to discuss these cases with your Regional Account Manager. Our Regional Account Managers are also able to discuss your complex cases with the Senior Underwriting team every day to pre-approve your cases prior to you carrying out a decision in principle.
- Additional provision for CIS Contractors
When speaking to a Self-Employed person who works in the Building trade, do make sure you establish whether they are Self Employed, or whether they are in fact a CIS Contractor. We can assess CIS Contractors in various ways. We can class them as Self-Employed and work off the tax returns and tax calculations, or we can class them as PAYE and work off the last 3 months payslips instead. This means that if you have a CIS Contractor who has been working on the CIS scheme for less than 12 months, we could help them too! You may even find that they may have more borrowing power by using the last 3 months gross pay rather than using the last years net profit figure.
- Use of ‘Sale of property’ as the repayment vehicle
Some customers like to have their mortgage on Interest Only and would like to use “Sale of mortgaged property” as their repayment vehicle. Again, this is something Foundation can assist with. We have no minimum income requirement for Interest Only mortgages, and to use “Sale of property” as their repayment vehicle we just require a minimum equity amount at the start of the mortgage of either 150k or 200k if the property is in London or the South East of England. For interest only, we lend up to 70% LTV (or 80% part & part), which is highly competitive in the specialist mortgage market place.
A note on service in July 2022
We are proud of our 1-day SLA to carry our initial underwrite on your case. We are also one of the only lenders who will hold your chosen rate with just a DIP. Your DIP holds that rate for a week, giving you 7 days to submit the FMA. Our Regional Account Managers are working from home 4 days a week to make them available to you by phone or video call to help with your new case enquiries, and Foundation also has two additional teams of dedicated underwriters and experienced telephone case managers to provide you with ongoing support.
We would love to provide the solution for your next Self-Employed case. So, get in touch today!
FOR INTERMEDIARIES ONLY
