In a move to further expand its support to the so-called mortgage misfits, borrowers struggling to get a new deal because of the stricter lending rules, Ipswich Building Society is rolling out three new products for the self-employed.
The self-employed are among the most affected by the Mortgage Market Review (MMR) introduced last April. The new rules require lenders to do more detailed checks of borrowers financial affairs before advancing them a mortgage loan. As self-employed often have difficulty to provide proof of their real income, many of them now are not able to remortgage at a good rate.
New research from Ipswich Building Society shows that over three quarters (77 per cent) of self-employed workers are concerned about not being able to shop around to arrange a mortgage and nearly two thirds (63 per cent) believe that mortgage providers expect them to jump through more hoops than employed people during the application process for a new loan.
The research indicates that 40 per cent of those who have (or intend to have) a mortgage in the future are worried they might have difficulty arranging finance because of their working status. Furthermore, 80 per cent of self-employed people stated they believe a broker will be key in helping them access a mortgage.
Ipswich has now announced it is launching three new mortgage products to best suit different self-employed groups.
The Self-employed Specialist: a new two-year 75 per cent loan-to-value (LTV) discount mortgage available for purchases and remortages at a rate of, currently, 3.59 per cent (5.4 per cent APR). The product is available for loans up to £350,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. The applicant must be in the same line of work as carried out for the previous three years and have accounts for a minimum of a year. Income can be verified to the 12 months accounts in the first instance or via HMRC self-assessments (SA302). The applicant’s accountant must also be suitably qualified in accordance with Lending Policy.
The Self-employed Professional: a new two year 90 per cent LTV discount mortgage available for purchases and remortgages at a rate of, currently, 3.99 per cent (5.4 per cent APR). The product is available for loans up to £500,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. This is aimed at those in a professional occupation, such as solicitors, architects, accountants, dentists, doctors, surveyors, pharmacists, vets and optometrists, and who have been working as part of an established partnership of at least three years. The Society will consider up to 90 per cent LTV for applicants who can provide accounts for over a year but will also consider up to 75 per cent LTV for applicants who have accounts for the period of less than one year provided they work at an established firm.
The Contractor: a new two year 90 per cent LTV discount mortgage available for purchases and remortgages at a rate of, currently, 3.99 per cent (5.4 per cent APR). The product is available for loans up to £750,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. This excludes the Construction Industry Scheme (CIS).
Paul Winter, chief executive of Ipswich Building Society, commented:
“Too many credit-worthy borrowers with unusual circumstances are overlooked by mainstream mortgage lenders and our view is that ‘mortgage misfits’, including the self-employed, freelancers and contractors, should have the same level of choice and access to the mortgage market as any other group.”
