Mortgage warning: SEISS SOS

Mortgage warning: SEISS SOS

Self-employed people who used government grants are being penalised by some mortgage lenders, which see the use of support schemes as a “red flag”. 

A mortgage warning has been issued to self-employed business owners in receipt of SEISS, as they may struggle to secure a deal.  Some high street banks are refusing to even consider self-employed applicants if they have taken any Government covid grants

Many leading UK banks are refusing to provide mortgages to self-employed workers if they took Covid loans or income grants despite being told by the Government and banking watchdog that the payments would not affect their credit ratings.

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said many banks were now referring applications from the self-employed to their manual underwriters automatically, whether they had received financial support from Government Covid schemes or not.

Mortgage brokers have said some high street banks are refusing to even consider self-employed applicants if they have taken any of the Government Covid support, including bounce back loans or payments from the Self-Employment Income Support Scheme.

However, the Financial Conduct Authority (FCA), which regulates banks, said making use of one of the Government financial support schemes should not prevent self-employed people from accessing credit.

Lee Howard, Howard Mortgages said:

“We’re seeing a massively different and inconsistent underwriting criteria from mortgage lenders.  Some will say – any assistance is NO, some will accept grant assistance, some will choose to completely ignore the last year’s trading accounts because they say that it skews the figures too much, and some reduce loan to value for those who are self-employed.  This inconsistency is causing chaos for clients.”

“Unfortunately, self-employed people have really borne the brunt of this and have had real issues throughout this crisis.  Many lenders have now moved self-employed people to an almost entirely manual underwriting process, and aren’t allowing their systems to generate decisions in the same way they would usually for an employed person.  They want to look at bank statements, trading accounts, 12 months history of business, invoices – the works, it’s all pretty old school.”

“We’ve unfortunately now got a situation where many people who have accepted Government support are now effectively mortgage prisoners.  If you’re self-employed it’s a rock and a hard place about whether you accept the support, or if you go it alone which is a really awful situation.”

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