View more on these topics

Self-employed are left out in the cold for mortgage deals

I have a client coming off an Abbey fixed rate and I am looking for the best options for them.

I have already obtained the retention products available through Abbey for Intermediaries but my client is keen on Nationwide’s Switch and Fix range.

The client is self-employed and has been for 23 years. He has a property worth £850,000 and a mortgage of £428,000. His net profits are £100,000 a year.

When I put all his components into the Nationwide affordability calculator it states he can only borrow £295,700 as he also has £15,000 on a few credit cards.

But if I go back to the start of the calculator and change him from self-employed to employed, with all other facts remaining the same, he can borrow £407,700.

So basically he could borrow £112,000 more if he was an employee with the same set of circumstances. As a self-employed broker I am staggered by this.

To compound matters last month I arranged a mortgage for a client who had just moved jobs. They had a probation period of six months from October 1.

The applicant was earning £90,000 and got their mortgage accepted from Nationwide.

It seems strange that Nationwide will lend to someone after one day in a job with no guarantee of work after six months and not enough to a client who has been self-employed for 23 years.

I now have to try to explain this to the client. He has £422,000 equity in his property, earns £100,000 a year net and is already servicing a £428,000 mortgage with Abbey at a higher interest rate.

The self-employed are being squeezed out of the mortgage market. As a self-employed broker, when I decide to move house I will look for a job first.


Philip Tebbatt

The high price of procrastination

If lenders find themselves facing unpalatable regulatory changes soon they only have themselves to blame for not responding to the FSA’s consultation on the Mortgage Market Review, says Philip Tebbatt

Lloyds Action Now calls for £2bn compensation

The government’s Budget pledge to sell off its shares in Lloyds Banking Group has led to campaigner Lloyds Action Now launching a £2bn claim for compensation. It has instructed lawyers to investigate a judicial review of the decision.

Iain Chadwick

The Budget 2015: a brief overview

Following George Osborne’s delivery of his sixth Budget as chancellor and the last of this current parliament, we have provided a brief overview of the initiatives put forward in his statement, focusing on the topics that have an impact upon the pensions landscape, savings, personal taxation and businesses.


News and expert analysis straight to your inbox

Sign up