The ‘one size fits all approach’ of larger lenders

Since 2020 the self-employed have seen increasing challenges when applying for a mortgage, the situation doesn’t appear to be improving either, as the Mortgage Broker Tools (MBT) Affordability Index¹ identified that a third of all self-employed applications did not pass the lenders’ affordability criteria.

To better understand how the self-employed feel about the mortgage market, and how we and brokers can help them, we commissioned an independent survey.

Understanding the challenges

The survey went out to 1,000 self-employed people and the headline statistics include:

• Nearly half (49%) said they wouldn’t feel confident finding a mortgage lender that offers an affordable self-employed product
• Less than 1 in 5 (19%) believe there is a good choice of lenders who offer self-employed mortgages
• Nearly three quarters (73%) of participants surveyed believe that being self-employed puts them at a disadvantage when applying for a mortgage
• Only 15% agreed with the statement that there are plenty of mortgage products available on the market for self-employed individuals

(Source: You Gov, June 2023)

To us, this indicated that this segment of the market isn’t well catered for by the ‘one size fits all’ approach of the larger lenders. They don’t cater for complex cases leaving self-employed applicants with very few options. Specialist lenders like us are available, but of course they are lesser known to your average mortgage customer. This highlights how important it is for lenders and brokers to work in collaboration to ensure self-employed borrowers know that there are products available for them.

Getting our criteria right

At Saffron we work hard to engage and listen to brokers and it’s through our partnership-style approach that we continue to improve our service and ensure our criteria are as flexible as possible, to suit even the most complex incomes.

Unlike many other lenders, we only require one year of trading accounts to be considered for our specialist self-employed product range. The rest of the products in our portfolio are on offer to self-employed applicants with two years or more of trading accounts, these include our self-build and JBSP products. 

Bringing this to life – a broker case study

This case study details how Kelly Sjoberg worked with our team at Saffron to secure a self-employed mortgage for her client. Kelly is a business development manager at Smart Advice Financial Solutions, a network partner of  Mortgage Advice Bureau.

After returning to the UK from living abroad, Kelly’s client was looking to buy a house for her family. She found a property that was in a chain with a seller who had a short and fixed completion deadline, so the pressure was on to secure a mortgage as quickly as possible.

Kelly’s client’s property search started three years after returning to the UK, which meant she only had two years of business accounts and a low credit score.  To compound matters, she had also taken some time off work for health reasons meaning her 2021 earnings were much lower in comparison to 2022. 

After reviewing her case Kelly realised that her client’s circumstances meant that most lenders wouldn’t consider her, but she did manage to select one that looked favourable given the lending criteria only requesting one year of accounts.  The application started to progress, however, as they neared completion the lender declared they would require an additional year’s accounts.  Unable to provide this, the offer didn’t materialise.

Given this, time was not on her side, but by co-incidence Kelly had a pre-arranged meeting scheduled with one of Saffron’s BDMs. After discussing her client’s complete case with them, Kelly submitted a mortgage application immediately.  The process that followed she refers to as “smooth and fast”, and despite the initial lender falling through, we managed to deliver an offer ahead of the deadline.

We were delighted to be able to support Kelly and get to a positive outcome for her and her client - meeting her needs with our flexible criteria.

You can find out more about our self-employed product, and our full specialist mortgage range, on our web site: https://www.saffronforintermediaries.co.uk/

About Saffron Building Society

Saffron Building Society is a mutual organisation with over 170 years of experience in supporting its members. Saffron distributes its award-winning mortgages through intermediaries, with a focus on meeting the needs of non-typical cases. The Society also offers a wide range of savings products including cash ISAs and children's accounts available direct through its online, post and branch channels. The Society’s branches are based in the East of England and it recently surpassed the £1bn milestone in assets.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.