SEISS effect on self employed mortgage claim

Ginoled

Hi there,

I haven't seen any recent threads about this, and I'm struggling to hear anything back from my bank...

I have claimed each of the SEISS grants available and will be claiming the most recent too, covering the end of 2020 and start of 2021. I run a small activities company and I can see the business recovering well going forward. The business has been run for 5 successful years previously. Will my situation effect an up coming mortgage application? Are there any lenders you would recommend?

Many thanks in advance.

justwhat

Probably ,  Can you not hold off until things pick up?

Its hard at the best of times getting a mortgage if you are SE. Is this a re-mortgage or a new mortgage.

If you have 0 income or next to 0 over the SEISS grants period they will be harsh on you. 

smpNWI

You can rule out Natwest completely per their updated self employed guidelines 
See Government Support Schemes section here https://www.intermediary.natwest.com/intermediary-solutions/SelfEmployed_Hub.html 

Thrugelmir

A question better asked on the Mortgages board where the brokers reside. 

A_Random_Man

Honestly you probably will struggle with the mainstream lenders, as you taking the grants means you are struggling and banks would not lend money to someone who is struggling. 

Pennywise

A_Random_Man said:

Honestly you probably will struggle with the mainstream lenders, as you taking the grants means you are struggling and banks would not lend money to someone who is struggling. 

Not really true.  Lots of people claimed the grants because they were entitled to them, rather than because they needed them.

Grumpy_chap

Ginoled said:

I have claimed each of the SEISS grants available and will be claiming the most recent too, covering the end of 2020 and start of 2021. I run a small activities company and I can see the business recovering well going forward. The business has been run for 5 successful years previously. Will my situation effect an up coming mortgage application? 

Most lenders use financial figures for the individual / company for the 2 / 3 years prior to mortgage application as the means to assess mortgage lending.

With COVID, lenders seem to have massively tightened criteria for everyone for any kind of lending.  Too tightly IMO and a massive knee-jerk over-reaction.  I assume that lenders will return to more normalised criteria as without making new lending, lenders don't have a business and can't make profits.  That does not help you in the immediate term.

To claim SEISS, the first grants simply needed a statement that the business was "adversely affected" by coronavirus, but that could mean buying one pack of face masks at £9.99, or it could mean completely stopped trading.  To claim the latter grants, there needed to be a more relevant statement about the financial impact to the business.  Lenders will take a dim view of business that suffered an "adverse affect" from something or been financially impacted.  Having said that, if you were entitled to SEISS within the rules, it would be daft / negligent not to have claimed.

The answer to your question "Will my situation effect an up coming mortgage application?" has to be "Yes".

The way forward is likely to be via a good broker and present some detailed figures of the past performance of the business, the restrictions imposed and impacts to the business, why those impacts do not continue to have a negative affect, and your detailed business plans going forwards.  You might want to show factors like how you have made the business COVID-secure, how you can adapt the business to be resilient against future lock-downs, and any insight you have to whether the size of the market will be as big going forward as it was previously.

Good luck

TBagpuss

As GrumpyChap says, lenders are likely to take it into consideration -- they need to look at how good a risk you are - and even where the loss of oncome isn't your fault, it's still relevant.
They will be looking at the full picture - things such as how large your deposit is, what income you have had from your business, (assuming it wasn't 0)  will be relevant, as well as the bare fact that you claimed the grants. How long the business has been running and what the normal pattern of income / profit is may be of some relevance

If your business was effectively completely shut down then you presumably haven't actually earned anything for months, so a lender is likely to be much more wary than if you had had a steady but reduced income. 

You may need to provide fairly robust business plans and cashflow / P&L forecasts to show what evidence there is that the business is recovering and is likely to perform well moving forward. 

Assuming that you are now reopening, then if you are able to delay your mortgage application for a few months so you are able to show several months of strong and rising income , as well as past records and future projections, you are likely to be in a stronger position, but either way, you're likely to need a specialist broker. 

A_Random_Man

Pennywise said:

A_Random_Man said:

Honestly you probably will struggle with the mainstream lenders, as you taking the grants means you are struggling and banks would not lend money to someone who is struggling. 

Not really true.  Lots of people claimed the grants because they were entitled to them, rather than because they needed them.

Actually true seen as I work for a bank and we don't accept anyone who has taken a grant in the last three months regardless of whether someone needed it or not. 

leopoldo_2

I think it's easier if you are remortgaging. I did it a couple of months back after claiming the first 3 grants and it didn't put them off. It'll largely depend on how badly you were hit and whether your business has since recovered.

Pennywise

leopoldo_2 said:

I think it's easier if you are remortgaging. I did it a couple of months back after claiming the first 3 grants and it didn't put them off. It'll largely depend on how badly you were hit and whether your business has since recovered.

Trouble is that many banks are lazy and won't look into it properly, if at all.  Some lenders have a blanket policy of refusing loans if someone has claimed the SEISS, regardless of other factors - it's a classic case of the lazy tick box mentality.