Complex incomes don’t have to mean complicated cases

The employment market has changed. Brokers today will see clients whose income - and income streams - are more varied than in days gone past. Among younger borrowers in particular, there is an ambition if not an expectation to have side hustles on the go, as they aspire to build a better, more comfortable life for themselves.

According to official figures, between September and November last year around 4.4 million workers were classified as self-employed, a significant portion, potentially with a range of income sources over any given month.

These multiple income streams are a reality, a fact of life, for significant numbers of people yet there are concerns some in the lending community have not kept up. Lenders are being left behind.

Complex doesn’t mean complicated

We have had cases in the past where the broker brought the case to Atom precisely because high street banks had struggled to accommodate those varied income streams when establishing affordability, leaving the borrower having to jump through repeated hoops just to get an offer, which could easily end up being for far less than they needed or could afford to repay.

As an industry, we need to get with the times and ensure we can appraise borrowers and their circumstances fully. It’s something Atom bank has worked on extensively, and I’ve seen the benefits it can deliver to brokers and their clients, with cases still able to proceed swiftly even when there are complex circumstances involved. Expecting potential borrowers to have straightforward circumstances as a matter of course is outdated and unfair, but if lenders get the processes right they can ensure that cases with complex income are handled in much the same way as those with more traditional income arrangements.

Brokers are crucial

This is an area where quality mortgage brokers really come into their own. The art of advice has always been about far more than identifying a competitive rate, but being able to judge which lenders are best placed to deliver for a specific client, and their specific needs.

Brokers have to understand which lenders are equipped to handle cases with complex income, who can consider a case holistically even if there are multiple income sources or something else unusual about the borrower’s position. Brokers will also strive to pinpoint the lenders who can handle those apparent complexities without there being a substantial knock-on effect on the speed of the case progressing.

Each lender will have their own approach to cases involving more complex income. The criticism of some lenders, particularly those on the high street, is they sometimes rely on overly simplistic processes, automated tickboxes, where the default response is a no if circumstances fall outside of certain, rigid parameters.

As a result, we see certain lenders trumpet the value of entirely manual underwriting, where the case is overseen by a single member of staff throughout. However, I’d argue the issue isn’t with technology itself, but rather how it has been implemented. Lenders like Atom bank have worked to ensure the faster and smoother experience made possible by a level of automation can in fact support those with complex circumstances.  Pick the right lender and the computer can and often will say yes, even if complex circumstances are involved.

The times they are a-changing

It’s important to understand that the changes to the employment market are here to stay. In the years ahead, brokers will continue to see plenty of clients with complex incomes, whether they are entirely self-employed, utilising a side hustle, or have some other unusual elements to their wages.

It’s not good enough to treat complexity as a hurdle that cannot be overcome. Doing so simply risks freezing out a whole suite of potential borrowers, for no good reason, clogging up activity in the housing ladder. Lenders need to recognise the direction of travel and invest in the systems which mean we can provide the same experience for all borrowers, no matter how many sources of income they have. Complex income should not mean a case is too complicated to consider.

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