Newcastle Intermediaries has revamped its range of mortgages for self-employed borrowers with the launch of a trio of two-year fixed-rate products.
The revised range targets self-employed individuals who have been trading for two years and under. The lender would request either one year of accounts or an SA302 form which summarises the income that has been reported to HMRC – not both.
The first product is at 60 per cent LTV and comes with an interest rate of 2.49 per cent with a £199 reservation levy and £800 completion fee.
For borrowers with a 25 per cent deposit, a loan fixed until 31 August 2018 is priced at 2.89 per cent – also with a £199 reservation charge and £800 completion fee.
A fee-free option is available with an inflated 2.99 per cent rate of interest, but offers free legal fees for re-mortgages or £300 cashback for house purchases.
The products offer free valuation on properties up to and including £500,000 and are subject to a 3 per cent early repayment charge until the end of the fixed-rate term.
A standard variable rate, currently at 5.99 per cent, is applicable after the end of the fixed-rate term.
Provider view
Steve Carruthers, head of mortgage distribution at Newcastle Intermediaries, said: “We’re continuing to provide much-needed support to a growing group of self-employed individuals with the launch of these competitive mortgages.
“We appreciate it can be difficult to find a lender that truly understands the needs of self-employed clients in the early stages of their journey, which is why we’ve also recently reviewed our policy to make it easier for them to apply for a mortgage.”
Adviser view
Tom Oliver, IFA at Newcastle-based Lamb and Associates, said: “I am not a lover of two-year fixes. There is a place for them in the market, but I prefer longer-term fixes because those who fix for the short term will soon have to arrange another fixed-rate deal which would cost them another £1,000 in fees. Those who choose not to remortgage will be stuck on a standard variable rate of 5.99 per cent, which is quite steep.
“In saying this, I think all three loans are cracking – especially for those looking to secure a mortgage of £100,000 and under.
“The self-employed can find it quite difficult to secure a mortgage. The first two years of trading can be tough for new businesses. Most will not generate a profit, but providers are only interested in those who make a profit. Lenders also get a bit uncomfortable when they see profits fall.”
Charges
Total costs (including the reservation and completion fee) ranges from £0-£999.
Verdict
In theory, those in self-employment have access to the same amount of mortgage products as everyone, but only if they satisfy the lender’s minimum deposit requirements and prove they can make the repayments on their loans. However, in practice, the mortgage application process can prove to be an arduous task for self-employed individuals.
Here, the lender has opened its doors to a significant group of people who would otherwise have been refused by some of the mainstream lenders that stipulate three years books before even considering an application from such individuals – so long as they can prove their ability to meet their monthly repayments.
