Blog post
July 6, 2023

‘Complex incomes’ are increasingly common – how can lenders meet this increasing need?

To register or apply for our residential mortgage products, please visit out residential mortgages page. 

By Jason James, Corporate Account Manager at LendInvest

We’re dreaming of the days where we no longer need to discuss the impact of the cost of living crisis, coronavirus and inflation. However, for now – these economic issues are shifting the population’s favoured way to earn. 

In Q1 2023, it was reported that we hit a record level high of workers with second jobs. A 18.5% increase since the start of the pandemic (Q2 2023), according to the Office of National Statistics. Portraying the increase in complex income homebuyers. 

Let’s define complex – to us, complex employment is anyone that does not fit one of the following categories; the self-employed, contractors, or those with multiple jobs.

In reality, this isn’t that complex, it is just a reflection of the modern world of work. But in banking and mortgage terms; this is complex enough to put off many high-street lenders. 

The self-employed

As the pandemic hit, a growing number registered to become self-employed. Adapting to lockdown restrictions and digitalising skills sets. Some of these new roles included virtual assistants, freelancers, and independent contractors. 

Since then, the self-employed can count for one in ten aged 16 years and over (9.6%), according to IPSE. 

This growing popularity of becoming self-employed has caused a spike in the number of specialist mortgages needed in the UK. Traditionally, the self-employed, due to their income structure, will rely on a specialist mortgage broker to source a lender that caters for their accounts. 

Contractors

Being your own boss has been a desired trait since the economic downturn began. 

Controlling what work you do, how many hours you work and when to take your annual leave allowance has become an attractive proposition to the construction industry in particular.

The evolution of this employment method has meant mortgage brokers are witnessing an increase in aspiring homeowners with complex income structures. 

Contractors often bounce between contracts, or may have more than one on the go at once. Finding a lender that accepts these clients is priority one.

Multiple income streams

Qualtrics’ recent survey finds a third (34%) of UK workers have looked for a second job to fight the rising cost of living. This survey was conducted in September 2022. It is likely for this figure to have risen since initially reported!

The current problems the UK economy is facing, has caused the general public to work longer hours, find additional jobs and take less time off. 

These clients can often be harder for lenders to calculate risk. This is due to multiple factors, including; zero-hour contracts, multiple contracts, additional travel costs and more. Lenders are required to take a hands-on approach to these customers, so they can understand their scenario and working arrangements.

Our residential mortgage offer

What our range does is offer solutions to your more complex customers who find themselves outside of the criteria of mainstream banks just because of the more common occurrence of mixed incomes. 

Criteria includes, but is not limited to:- 

  • Lending to 1-year self employed
  • Using the value of their last contract to calculate income
  • Mixed income allowed up to 100% of the affordability calculation

Up to 85% LTV, with interest only up to 70% LTV, our range also fits in neatly for people remortgaging in a new environment where they may be discounted from mortgage lenders’ acceptable criteria; so-called ‘mortgage prisoners’, especially with our stretched LTIs across different professions and histories of credit.

The housing market has – always – been exceptionally resilient because of the importance we place on owning our own home. The properties are there, we just need to support buyers to get into them. 

To register or apply for our residential mortgage products, please visit out residential mortgages page. 

LendInvest Loans Limited is a company registered in England & Wales with Company No. 09971600.

LendInvest Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN:737073). LendInvest Loans Limited is a wholly owned subsidiary of LendInvest plc.

Borrowing through LendInvest involves entering into a mortgage contract secured against property. Your property may be repossessed if you do not repay your mortgage in full.