Brokers: Independent mortgage clients are the hardest to place

Mortgage applications for self-employed clients and entrepreneurs are the most problematic for brokers, according to research from broker forum Cherryplc.co.uk, but a more personal approach can solve this problem.

According to a survey by the forum, 24% of brokers said self-employed and contractor mortgages were the most difficult to place, followed closely by clients with poor credit.

Cherry’s survey also said 18% had problems placing low-income clients, and 14% said payday loans were their biggest headache. Other difficult areas highlighted by brokers include non-standard construction and debt consolidation cases. Cherry did not disclose the sample size for its survey.

Donna Hopton, Director of Cherryplc.co.uk, said: “We know the specialist mortgage market is booming, with competitive solutions for a range of customer circumstances, but our research shows that brokers may still have problems. struggling to place cases for common circumstances like self-employment, contract work and adverse credit.

One of the main problems for independent borrowers is systematic. Lenders will generally work on the last three months of payslips for traditional employees, while for the self-employed they will look at finalized accounts.

Greg Cunnington, COO at LDNFinance, said Mortgage Solutions that this difficulty for brokers and their independent clients is due to the current configuration of the credit system, but that this is improving, with specialized lenders making their lives much easier.

He said: “With a self-employed person’s finalized accounts, you will regularly see the impact of the Covid decline, which is reflected in the accounts even when their business is doing well post and pre-Covid. So you end up with a lot of these very successful customers who are haunted by this instability of Covid for a lot longer and struggling to get a mortgage.

How brokers can solve this problem

Cunnington said the main problem brokers faced when trying to place self-employed cases was having to filter out the different loan sizes for each lender.

He added: “It takes a lot more work and time, but I think that’s a good thing because these clients really need a middleman and that extra bit of advice, which is the whole point of be a broker.”

He said it could be solved through digital means.

Cunnington added: “As brokers, it’s all about using the improved technology correctly that passes properly so that the vanilla cases don’t touch the sides. This frees up time for you to use your brokerage teams for more complex cases and ones that require the extra attention of a broker who can handle these cases properly and ensure the client understands how lenders assess their accounts, what they are looking for, what they can use and how best to manage their business accounts to best match what lenders are looking for.

“A lot of big lenders need two or three years of accounts, which puts off a lot of otherwise very successful self-employed borrowers, but we know which ones only need a year to be able to connect them with these lenders. .”

Paul Stringer, Managing Director of Norton Home Loans, said: “Often the right solution for an individual is available from one of the smaller specialist lenders and the cherry forum is a good way for brokers to leverage the knowledge and everyone’s experience in the industry for free to arrive at the best result for their client.

Lenders need to add a human touch

Cunnington said: “Lenders need to increase their ability to have more human underwriters to do manual assessments. There are now a growing number of specialist lenders who will do this for independent candidates and there is a high success rate with this approach.

“Some lenders have also improved their criteria recently. Clydesdale, for example, works on gross profit instead of finalized accounts, which can help freelance clients borrow more than they would otherwise get.

Sylvester L. Goldfarb