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Revealed: The borrowers who are struggling to get a mortgage

Christina Hoghton
Written By:
Christina Hoghton

Many types of borrower find it hard to get a mortgage with high street lenders, but a professional broker could find them a solution

Mortgage rates have risen hugely this year and lenders are looking carefully at the affordability of every single applicant.

But some borrowers are more likely to struggle getting a mortgage than others.

That’s usually because they have non-standard income, as lenders need all borrowers to prove their income and this is obviously much easier for those in permanent employment.

According to mortgage brokers, the self-employed, IT contractors and NHS agency workers can all struggle, because it’s harder to show lenders their true earnings.

Here’s what they said.

Unmortgageable borrowers?

Matthew Jackson, director of broker, Mint FS, said: “Anyone outside the norm of a standard PAYE contract has been treated as an underclass by lenders.

“For example, with paid commission, lenders may only use 50% or 20% of this or even nothing. I have seen lenders until recently lend up to 5.5x income if you are employed and 4.49x if you are self employed.

“Unwittingly, they are creating a two-tiered lending system. We all need to realise that the landscape in the UK is changing: work is moving remote, hybrid, flexible and more project-based. Entrepreneurs drive the UK economy, they create jobs, growth and wealth and it’s about time they were given a level playing field.”

Imogen Sporle, head of property finance Finanze, said: “Lots of mortgage lenders will still only base your lending on your contracted hours even if you regularly do overtime, or those that will take the overtime into account will only take a proportion of it into account. This can be so frustrating as you may be working 45 hours a week making a very good income but you can only borrow a fraction of what you want because the lender is basing your affordability on a 15-hour work week.”

Christopher Hall, director of broker, Mortgage Guardian, added: “Visa holders are another disadvantaged group as they have not usually been in the country very long before wanting to get onto the property ladder. Despite mostly being high-quality applicants, visa holders are at the mercy of lending criteria as they do not hold ‘indefinite leave to remain’. Lenders have made it even harder post-Brexit with the minimum period needed to live in the UK vastly extended.”

NHS workers

Rob Peters, director of Simple Fast Mortgage, said even some NHS workers can struggle to get a mortgage. He explained: “NHS shifts are effectively zero hour contracts, but some lenders will accept this work at 100% with only a few payslips.

“However, if you work for the same NHS via an agency you will likely need 12 months of work history for most mortgage lenders.”

He added: “The true unmortgageables are those who are stuck in flats that have cladding issues that have not been rectified by the freehold owner. You can’t remortgage because 99% of lenders won’t touch it without an EWS1 form confirming it’s up to standard. You can’t sell, either, because buyers can’t raise finance on it.”

Natalie Hines, founder at Sutton Coldfield-based Premier One Mortgages, said: “I help clients who work in the TV industry on short-term fixed rate contracts. They all have different ways of being paid.

“Some are limited company directors, some are sole traders and some are employed on fixed term contracts from anywhere from two weeks to two years and to complicate things further some are a mix of employed and self-employed. It really helps choosing a broker who knows which lenders will be willing to assist in different circumstances. I had a client recently on a fixed rate contract who was advised they won’t be able to secure a mortgage when this is absolutely not the case.”

Get broker support

Rhys Schofield, managing director at Derbyshire-based mortgage advisers, Peak Money said it’s very rare for someone to be truly unmortgageable and agreed that broker advice was vital.

“The problem seems to be that too many people may speak to one or two high street banks, get knocked back and think that’s it,” he explained. “The reality is that if you speak to a good mortgage broker with a specialism in your field, there will often be a solution.”

Anil Mistry, director at Leicester-based broker, RNR Mortgage Solutions, agreed: “The bottom line here is that if your circumstances are anything even marginally complex, such as being a contractor or self-employed, then approach a broker and don’t go directly to a lender.”