Self-Employed Mortgage Applications During Lockdown

Oran_apex

Hey! 

Heard today that mortgage lenders aren’t accepting applications from self employed people who are closed due to covid-19 and have accept government grants as this is acceptance that you are in financial difficulty. Anyone on here shed any light on this?

Me and my fiancé have been saving to build a house for months now and after getting all my accounts sorted we approached a broker and we were told because I had applied for the “Localised Restriction Support Scheme” and “Self-Employment Income Support Scheme” I would not be able to apply for a mortgage for 6-12 months. Absolute kick in the gut if this is true.

Hopefully someone can help! 

Thanks
Oran

ACG

There is some truth to it.
From an underwriters view, if you are claiming grants that are only available if your business has been negatively impacted, it is difficult to get an underwriter to look beyond the fact your business is not performing as it was - it means your accounts/self assessments are not really accurate anymore (this isnt a dig as such, just an explanation as to why). 

However, that being said I believe if you are able to show your business is open and back trading with a relevent sort of income for a month or 2, there may be lenders who will take a look, but not if you are currently closed (as far as I am aware). 

Oran_apex

So more or less you have to show you’re opened and trading? Even if you’re receiving grants that are there to keep you closed during a pandemic as you cannot open? 

Surely there are some lenders that are still willing to look at you? 

ACG

There will be businesses that get these grants but never recover for various reasons - their customer are gone, they run out of money etc. 

Your business has always needed to be open and trading to get a mortgage, some lenders do credit checks on your business for example (without ever telling you), other lenders just do a quick companies house check. But now there is a much bigger chance your business is not open and trading, many lenders are asking for business bank statements. 

I will be really honest, I do not know what the answer to your question is. I do not take these cases on. We are liable for the advice we provide and by recommending a mortgage to a company with no income beyond grants is a bit risky for my liking. 

K_S

@oran_apex Similar to what ACG has said. A few lenders will give a blanket-refusal for any businesses that have taken SEISS recently.

However, practically speaking lots of businesses that (eventually) didn't need it did apply for and receive these grants. If you can evidence that the business has not been materially impacted by Covid, you may still have lenders willing to lend but your recent business income and outgoings will be subject to close scrutiny.

Greymug

Oran_apex said:

Hopefully someone can help! 

your broker already did, by telling you the truth.

[Deleted User]

At the moment, best case scenario, your income proof is from April 2019 to April 2020.   You arent currently trading, and you took grants for businesses who have been impacted by Covid.  

Purely from a practical point of view, how is a lender supposed to know you are closed because you are waiting to open rather than you are closed because you have gone under?  

Thats why they want bank statements from you back at some level of trading.  You dont necessarily have to show the same income levels as before,  but at the moment they dont know if you will ever take another £ in your self employment. 

It might not feel fair as the situation has been forced on you, but lenders have to prove they have lent money responsibly and it is very difficult to do that at the moment for some businesses.     

SurreySelfEmployed

Natwest have told me they can't take my income into account as I took the first two grants, despite since then trading has picked back up to normal levels so I didn't take the third grant and I have paid invoices as proof. What is worse is that they cannot point me to, or send me, any written / online explanation of the policy or when it might end - I asked, a month, a year, two years and was told, we don't know.  feels like another corona kick in the teeth.

_AandL_

Oran_apex said:

So more or less you have to show you’re opened and trading? Even if you’re receiving grants that are there to keep you closed during a pandemic as you cannot open? 

Surely there are some lenders that are still willing to look at you? 

Did anymore come from your mortgage search? I’ve recently applied for a mortgage and have taken the seis grants. 

cj1973

I am a self employed childminder who took the first 3 SEISS grants. Approached my lender (Natwest) to organise a Transfer of Title due to relationship breakdown and the ex wanting off the mortgage. Have worked throughout the pandemic but as soon as I mentioned SEISS the bank shut me down and said no. The bank employees suggestion to me was that I find a relative or friend who I trust who is in employment and without a mortgage to join me on the mortgage. I only need to borrow 25% of the value of my home. Now trying brokers but stress levels are now at a ridiculous level as want to be financially separated from the ex.