Saffron Building Society has overhauled its self-employed borrower criteria to focus on the most recent full year of trading – excluding the impact of the Covid-19 pandemic since April.
Where there has been a significant shift in business the lender is now using only the last year of accounts to assess affordability, which it confirmed to Mortgage Solutions would be up to the end of the 2020 tax year, 5 April.
The lender typically takes an average of three years’ accounts to assess borrowers, but has made the change where trading has varied significantly, either up or down.
A spokesman told Mortgage Solutions that Saffron was making the move to cement itself into this market “as others are pulling or adjusting criteria that is not in the best interest of the self-employed”.
The move appears to be a direct contradiction to many lenders who have chosen to tighten evidence requirements for self-employed borrowers, including requiring their most recent bank statements.
Contractor applicants will only need to have been in contracted work for three months and there is no minimum income requirement as the application will be based on affordability, the contractor is not on a fixed term PAYE contract and is self-employed – typically earning a day rate.
There are no industry restrictions.
Saffron Building Society chief commercial officer John Penberthy-Smith said: “With this clarification, we hope to streamline initial enquiries and demonstrate our willingness to use a common sense approach to lending.
“Especially to the self-employed and contractors, who may be finding less flexibility with other lenders.”
Owain Thomas is features and contributing editor of Mortgage Solutions and editor of Specialist Lending Solutions.
He also has experience in the protection, pensions, workplace benefits and HR areas.
Owain has won two Headline Money Awards and the Protection Review’s Journalist of the Year award.