Lenders' criteria has, over the past few years, been an ever changing part of the industry, and no more so than the alterations in assessment of affordability.
With the number of self-employed workers in the UK steadily increasing since 2001, and reportedly now accounting for 15 per cent of the working population, it is this sector that perhaps results in the greater frustrations for would-be borrowers when applying for a mortgage.
The difficulties that can arise for the self-employed occurs throughout the age groups, but can be particularly daunting for many first-time buyers who do not have the experience of applying for a mortgage and in turn with how lenders assess permitted income.
This is likely to be a growing trend, with the numbers of 16 to 24-year-olds choosing the self-employed route doubling since 2001. However, the largest demographic of the self-employed – that also makes up a large proportion of the mortgage market – is those aged between 45 to 54.
TMA Club, together with Buckinghamshire Building Society, have recognised this growing need and have announced an exclusive two-year discount deal for self-employed borrowers.
Available for both purchase and remortgage with a two-year discounted rate of 3.59 per cent (1.65 per cent discount off the current SVR of 5.24 per cent), it is available up to 70 per cent LTV, with a maximum loan value of £500,000.
While it is initially introduced as an exclusive product, the plan to expand the availability of this product to the wider market will likely be well received by the broker community.
Although the pricing of the product will not place the scheme at the forefront of any search engine results, it is the flexible underwriting approach of Buckinghamshire Building Society that will give this exclusive its place in the market for the self-employed.
The new product has also been designed for borrowers who fit the lender's non-standard credit criteria and, albeit this is not a prerequisite requirement for self-employed applicants, it is a welcome addition to the lender's approach to this sector.
While many lenders continue to adopt the stance that income for the self-employed is simply that as shown on the applicants' personal tax return, the need for more to have a greater understanding how the self-employed market works is paramount to this sector having the same treatment when being assessed for their required loans as those on Pay As You Earn.
This product is therefore a welcome addition to the mortgage market.
Carl Shave is a director of Just Mortgage Brokers
