A mortgage has been launched which is aimed at self-employed borrowers who have experienced a dip in their income during the pandemic.
Kensington Mortgages ‘income recovery’ mortgage comes at a time when many people who work for themselves are feeling demoralised by a lack of lending options.
Indeed, research from The Mortgage Lender recently revealed as many as 30% of self employed people it surveyed thought changes to their finances during the pandemic would negatively impact their ability to obtain a mortgage in the future.
And 55% thought they wouldn’t be able to secure a loan for the amount they currently owed if their borrowing were based on their self-employed earnings over the last year.
What’s more, a survey published today by Aldermore Bank found half of self-employed workers in the UK thought their financial situation had become worse over the past year and 59% said their monthly earnings had fallen since the pandemic.
Mortgage details
The new income recovery product helps self-employed borrowers who saw a dip in their 2020/21 income (up to 25%) due to Covid, both directly and indirectly.
When applicants apply for the new mortgage, their affordability is calculated using the average of the borrowers’ last two years of income.
They must have a minimum of three years trading history.
Borrowers keen to take advantage of the deal should speak to a broker, who can also look for other options should the Kensington deal not be applicable.
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said: “Any support for self-employed applicants in the mortgage market is great to see, so this is a really positive move from Kensington.
“Many self-employed individuals will have been impacted by the pandemic, but are likely seeing their income levels return to normal again now, and so the more flexible lenders can be in assessing and underwriting applications for these clients the better.”
According to Kensington, rates start at 3.38% on a five-year fix at 75% LTV and loans are available up to £1.5million.
Craig McKinlay, new business director, Kensington Mortgages, said: “Over the last year, many self-employed borrowers have found themselves demoralised from applying for a mortgage, either through past rejections or bearing the financial brunt of pandemic.
“However, we’re not closing our doors on the self-employed. We’re keeping them wide open. Kensington will lend a hand to some of those hit hardest by the pandemic through the Income Recovery range.”
