No more ‘complex’: there’s just income

Explore simple Residential Mortgages for your more ‘complex’ customers here. 

By Paula Mercer, Head of Sales at LendInvest Mortgages

The world of work has changed; but have mortgage lenders changed with it? 

Self-Employment, Second Jobs, Part-Time Work, Zero Hours Contracts. 

All of these ways of earning a living have forever been classified as ‘complex’ in the mortgage world, but as we can see from trends over the last few years, it’s far from rare, and as the housing market becomes more and more difficult to access, lenders need to start being more accommodating. 

Indeed, these trends will only continue. Surveys conducted at the height of 2023’s cost of living crisis showed millions of people were considering second jobs, and with the internet meaning access to these types of jobs are always improving, it’s a consideration more and more lenders have to make. 

Why ‘complex’?

It’s probably easier to explain what isn’t complex. Mortgage lenders and brokers like the type of deals that they are familiar with and won’t cause them any hassle. 

What does this like? Stereotypically the profile would be: 

• Two, or sometimes one, incomes obtained from full-time employment
• Which they can evidence they’ve had for a long period of time, but as a minimum three months. 

The stuff outside of this is where the ‘complexity’ lives. Probably – bluntly – because it involves more work to evidence income for brokers and lenders, and there is an assumption of greater risk in employment that differs from the norm. 

However, not to labour the point too much, but the traditional ‘norm’ isn’t the norm anymore.

After the turbulence of the last few years where we’ve seen more and more industries cut jobs, you can argue that even the ‘traditional working role’ necessary to get a mortgage isn’t more stable than the types of work we’ve been discussing. 

Lender’s need to step in to make this easy for brokers and their customers, by challenging assumptions and offering the products that can deliver on it.

Finding solutions

This starts with understanding customers, and the challenges they may face, and how you can overcome that with product and criteria. 

Starting with people with second jobs, what’s the barrier to a mortgage for this group? 

Typically, lenders will only consider their primary source of income, as that is the most ‘stable’, and that impacts the amount they can borrow and their affordability calculations, despite the fact we and they can see the extra money in the account. 

Simple criteria changes, like allowing 100% of mixed income in affordability calculations, opens the door to many, while a simple and thorough underwrite to understand how regular can help it progress for the right customers. 

Similar applies for those on zero hour contracts or in part-time employment. The goal here isn’t to find a way to say no, but to find a way to say yes and offer opportunities within an acceptable and sustainable window. 

Looking a bit in-depth at the salary and how it fluctuates can give lenders the tool to properly estimate LTI ratios in a way that’s beneficial to them and the borrowers. 

Finally, the self employed have been a growing proportion of the UK workforce for decades now, but many of those will express the difficulty they face in trying to get a mortgage, despite the evidence of its sustainability by virtue of millions doing it. 

Obviously for the newly self employed, lenders need to be cautious, but a year of self employment is a positive middle ground to start offering the borrower mortgage opportunities, as will an open approach to viewing their income history. 

Dropping the ‘complex’ tag

Solutions are there for those with the will to find them. As more and more enter a different world of work to what lenders consider traditional, it is up to us to move to support them, rather than pull up the drawbridge hiding behind old-fashioned views of perceived risk. 

When it is absolutely the right outcome for the borrower, it can be the right outcome for the lender as well. 

Explore simple Residential Mortgages for your more ‘complex’ customers here. 

LendInvest Mortgages and LI Mortgages are registered trading names of LendInvest Loans Limited. LendInvest Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN:737073). 

LendInvest Loans Limited is a company registered in England & Wales (Company No. 09971600) and is a wholly owned subsidiary of LendInvest plc. LendInvest plc is a limited company registered in England No. 08146929. Registered office at: 8 Mortimer Street, London, W1T 3JJ.

Regulated lending is provided via LendInvest Loans Limited. Borrowing through LendInvest Loans Limited involves entering into a regulated mortgage contract secured against property. Your property may be repossessed if you do not repay your mortgage in full.