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.