Good news for self-employed borrowers as two 'complex' mortgages launched
In recent years, self-employed applicants have found it tough to be approved for a new mortgage. Strict income and affordability rules have made it difficult for people to prove their earnings while more automated underwriting has resulted on a 'tick box' mentality being adopted by many major lenders. Now, two new 'complex' mortgage products have been launched to try and help self-employed applicants.
Two new 'complex' mortgage products have been launched in the UK to try and help self-employed borrowers secure a home loan.
Paragon, historically a buy-to-let lender, has moved into residential mortgages this year and experts are hopeful its complex mortgages could help plug a big gap for borrowers who don't fit the normal employment mould. Challenger bank The Mortgage Lender has also launched a range of deals aimed at people with unusual sources of income, such as the self-employed.
Paragon will use its team of experienced underwriters to work closely with mortgage advisers to look at every application on an individual basis.
John Heron, managing director at Paragon Mortgages, says: “Customers with complex incomes looking for a residential mortgage deserve access to a wider choice of mortgage products. From our experience in the buy-to-let market, we know that customers with multiple sources of income are often among the most creditworthy and we see an opportunity to leverage this experience and bring new choice and competition to the owner-occupied market.”
The mortgages include two-year and five-year fixed rate deals available at 75% and 85% loan-to-value. Interest rates start from 3.29% for two-year products and 3.49% for five-year products.
The Mortgage Lender launches new self-employed deals
One of the UK's 'challenger banks' has also launched a range of loans designed specifically for borrowers who have complex finances, including income generated by anything from rents to contract work and the self-employed.
The Mortgage Lender (TML) offers deals up to 85% loan-to-value, with two-year fixed rates starting at 3.41%.
Pete Thomson, from TML, says: “Lots of homeowners have seen their situation change while they’ve been on their existing deal. Now, because they’ve become self-employed, taken on a second job, are paying school fees or maybe have some credit issues, they think they’ve got little choice but to just sit on their current lender’s expensive standard variable rate.
“That doesn’t have to be the case and they could save thousands of pounds in just two years, which they could be putting to other uses.”
Shop around for a self-employed mortgage
If you're self-employed then there are a number of lenders that could help you get the mortgage that you need.
As well as Paragon and TML, Kensington Mortgages, Precise Mortgages, Aldermore, TSB, Virgin Money, Bluestone, OneSavings Bank and many of the small building societies specialise in these types of mortgage. Most only lend through mortgage brokers and so you should speak to an independent advisor.
Mortgage expert Andrew Montlake says: "There has been a vast improvement over the past year or so in lenders looking at offering solutions for the self-employed, with some now able to lend to those with only one year’s accounts providing they have prior experience in their industry.”