Nationwide is offering improved lending terms to borrowers who are self-employed including access to mortgages which need just a 5% deposit.
The mortgage lender tightened up its policies for self-employed customers during the pandemic but said now was the right time enhance the terms.
As of today, self-employed borrowers can take out 95% loan-to-value (LTV) mortgages with Nationwide. These are deals which require only a 5% deposit.
Meanwhile, Nationwide has also increased the amount a self-employed customer can borrow to 5.5 times their income.
Self-employed workers often find it more difficult to access mortgage lending because their salaries are more complex.
In recent times, with mortgage rates rising so dramatically, self-employed borrowers have reported facing even greater hurdles. Analysis of mortgage broker enquiries in March found a third of self-employed could not find a deal that was affordable.
Fairer for self-employed borrowers
Gemma Bennett, senior mortgage broker for The Mortgage Mum, thinks the move is ‘encouraging’ and showed Nationwide had a forward-thinking attitude and modern approach.
She said: “It’s well known self-employed applicants have to jump through a few more hoops to prove income and security to lenders, making getting a mortgage more involved and in some cases more difficult. Lenders criteria is usually less generous towards self employed borrowers.”
Bennett added: “Now more than ever it’s becoming more common to be self employed or a limited company director. Lenders need to find a way to serve these borrowers in a way that is fair, responsible and accessible.
“As it stands, applicants are heavily underwritten and asked to produce more documents to prove income and sustainability compared to employed applicants.
“I think it’s great that the offerings are improving here to be in line with what employed applicants can access. That feels fairer.”
Will more lenders follow suit? Bennett is not sure: “It won’t be for all lenders straightway but hopefully will be viewed positively and prove to be an innovative move by Nationwide,” she concluded.
Henry Jordan, director of home at Nationwide Building Society, said: “Having changed our lending policy for self-employed during the pandemic, we believe now is the right time to increase our support by extending our maximum loan-to-value available to them to 95%.
“We’re committed to supporting self-employed borrowers as much as we can, which is why we’re also increasing the amount that they can potentially borrow with Nationwide to 5.5 times income.”
If you are self-employed and looking for a mortgage, speak to a broker or mortgage adviser to find out what options are available to you.
