Challenger bank Masthaven has published a study claiming lenders have not adapted their approach to the self-employed, older borrowers, parents, and younger borrowers, who sometimes struggle to obtain mortgages.
The report is based on a survey by Opinium Research of adults aged 18 and over which reveals the majority of these groups - and 60 per cent of the general UK population - believe they would find it hard to get a mortgage.
Opinium surveyed 2,003 people in January 2017 then repeated the survey six months later among 2,008 people in July 2017
The claim is that many borrowers feel unsupported because they think affordability constraints are preventing them from getting on the housing ladder.
But brokers on the ground who are actually engaged in sourcing mortgages for clients have denied there is a problem and pointed out that many of the rules are necessary to guard against unsafe lending.
Bob Riach, principal at Scunthorpe-based Riach Financial Advisers branded the challenger bank’s claim “rubbish”.
“Lenders are catering for the self-employed - I do a lot of mortgages for them,” he added.
“Most lenders want three years’ accounts. What they will normally do is take an average – the first year’s accounts are often not that good because it is expensive starting the business.
“For limited companies, what they tend to do is take the last three years’ salary in dividends. It is a little bit difficult, but it is still doable.
“With elderly people, a lot of lenders will lend past retirement age to 80 or 85 – but what they want is proof of retirement income.”
Ian Gwinnell, director at Stafford-based All Counties Financial, pointed out that many lenders had dropped self-employed income requirements from two years to 12 months.
“I feel that is reasonably responsible,” he said. “They say the first two years [of being self-employed] are the most difficult; I would say it is probably the first 10 years. Even for those with one year of trading accounts, I think the lender is taking a big risk.
He added that younger buyers can also pose a risk to lenders due to their lack of credit history.
“A lender will naturally adopt a more cautious approach, whereas someone in their 30s or 40s with a number of credit agreements will probably be offered slightly better income multiples than younger borrowers,” he explained.
Mr Gwinnell also described lenders’ approach to older borrowers – lending up to the retirement age and thereafter assessing eligibility based on pension income – as “reasonably lenient”.
