Mortgages  

Aldermore halves demand for self-employeds' history

Aldermore halves demand for self-employeds' history

Mortgage provider Aldermore is to reduce the minimum accounts history a borrower must provide when applying for a residential mortgage from two years’ history to one.

The company said that this would take into consideration a self-employed person's profit retained within their business when assessing affordability. 

Changes would provide applicants with "flexibility and support" by assisting them to purchase a new home or remortgage their existing one.

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Aldermore said that this reflects "a human approach to lending", with advisers and underwriters considering each case on an individual basis.

Charles Haresnape, Aldermore’s group managing director for mortgages, said: “There’s a growing demand for a tailored approach for self-employed applicants and their needs.

"As they often do not fit the ‘norm’ for many high-street lenders, it can be a real challenge for them to receive the financial support they need to buy a home.

"Self-employment now accounts for 15 per cent of the UK’s employed market, and we are consistently working to make sure the process of applying for a mortgage is as straightforward as possible."

New requirements for borrowers state that all applications should be accompanied by one year of accounts prepared by a suitably qualified accountant; accountants certificate SA302 and accompanying tax overview documents obtained from HMRC.

In most cases, Aldermore will use the latest years’ figures rather than an average of the last two years when making the assessment, if net profit is level or rising.

Ishaan Malhi, founder and chief executive of online mortgage broker Trussle, said: “The rate at which people’s working and earning habits are evolving needs to be acknowledged, and the self-employed market reflects this more than any other sector.

"Despite not being the first lender to require one years’ accounts, Aldermore's move acknowledges and responds to this societal shift.

“One-size-fits-all policies simply aren’t suitable for all borrowers, and Aldermore’s move could well prove to be a shrewd business decision.

“But it's important that lenders like Aldermore don't let this compromise the speed or quality of service. As well as 'process' innovation to achieve a more straightforward approach, technological innovation will allow this approach to be delivered at scale, without compromise.”