Paradigm Mortgage Services has launched an ebook for advisers called: ‘Lending to the self-employed’.
Written with help from lenders Pepper Money and Precise Mortgages, the free digital manual aims to help advisers better understand their self-employed clients and offer the right advice.
Topics covered include:
- The demographic of the self-employed marketplace
- The different types of self-employment
- How to read and understand a self-employed client’s accounting figures
- How to write a good business rationale
- How a lender underwrites a self-employed client
Paradigm said it wanted to help advisers work effectively with their self-employed clients and be in a position to harness their accounts and financial data to present the best case to lenders.
It said in this way the lender will be able to make a more calculated lending decision, giving advisers a far greater chance of securing mortgage funds for their client.
Prospects for the self-employed
The launch follows significantly increased demand for self-employed help from Paradigm’s Mortgage Helpdesk service, which saw its busiest ever month of enquiries in October.
Useful details include the difference between net profit which is the company’s bottom line and gross profit, which is the most reliable indicator of a thriving business or, for example, the most efficient way to use a director loan account to satisfy a lender.
Other pointers include waiting for a month before application to make sure the business’ bank statement reflects it in the best light, if, say the firm’s sector is seasonal.
The ebook is available to all intermediaries who can download it via this link on the Paradigm website.
Paradigm also has other free ebooks available to download covering mortgage fraud, the Senior Managers and Certification Regime and customers experiencing vulnerability.
Christine Newell, mortgage technical director at Paradigm Mortgage Services, (pictured) said: “At the end of last year, according to the ONS, there were five million self-employed people in the UK.
“Given what has happened during 2020 and the pandemic’s impact on the jobs market, our expectation must be that the number of self-employed people will continue to rise and advisers are likely to see more and more self-employed mortgage clients.
“We believe this ebook will be an extremely valuable resource for intermediaries at a time when finding the right lending solution for the self-employed has become increasingly difficult due to lenders regularly changing criteria, loan to value levels, and affordability assessments for this particular demographic.
“Advisers are finding the route through to a mortgage for the self-employed has become much trickier in 2020, and at Paradigm we wanted to help outline why that might be the case, and what advisers can do to smooth this path.”
Newell said the manual aims to help advisers sift through a raft of borrower complexities from multiple incomes, company set-ups, employment practices and the potential for more sophisticated circumstances than mainstream borrowers.
Victoria is group editor, Mortgage Solutions and Your Mortgage at AE3 Media.
Previous titles include editor of What Mortgage and Credit Today and a stint freelancing for various titles, including The Guardian, Which? and Money.co.uk