22 June 2015
Ipswich Building Society rolls out new products for contractors and the self-employed
Further support for Mortgage Misfits overlooked by big banks
With self-employment in the UK at its highest level since records began , new research from Ipswich Building Society shows that over three quarters (77%) of self-employed workers are concerned about not being able to shop around to arrange a mortgage and nearly two thirds (63%) believe that mortgage providers expect them to jump through more hoops than employed people during the application process for a new loan.
The research indicates that 40% of those who have (or intend to have) a mortgage in the future are worried they might have difficulty arranging finance because of their working status, and in line with its approach of supporting Mortgage Misfits, Ipswich Building Society is launching three new mortgage products to best suit different self-employed groups.
The Self-employed Specialist: a new two year 75% LTV discount mortgage available for purchases and remortages at a rate of, currently, 3.59% (5.4% APR). The product is available for loans up to £350,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. The applicant must be in the same line of work as carried out for the previous three years and have accounts for a minimum of a year. Income can be verified to the 12 months accounts in the first instance or via HMRC self-assessments (SA302). The applicant's accountant must also be suitably qualified in accordance with Lending Policy.
The Self-employed Professional: a new two year 90% LTV discount mortgage available for purchases and remortgages at a rate of, currently, 3.99% (5.4% APR). The product is available for loans up to £500,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. This is aimed at those in a professional occupation, such as solicitors, architects, accountants, dentists, doctors, surveyors, pharmacists, vets and optometrists, and who have been working as part of an established partnership of at least three years. The Society will consider up to 90% LTV for applicants who can provide accounts for over a year but will also consider up to 75% LTV for applicants who have accounts for the period of less than one year provided they work at an established firm.
The Contractor: a new two year 90% LTV discount mortgage available for purchases and remortgages at a rate of, currently, 3.99% (5.4% APR). The product is available for loans up to £750,000 and offers a low application fee of £199, a completion fee of £800, unlimited overpayments and no early repayment charge. This excludes the Construction Industry Scheme (CIS).
Ipswich Building Society coined the term Mortgage Misfits to describe those who find themselves overlooked by the main high street lenders on account of their status, including older borrowers, self-builders, those facing major life changes and the self-employed and contractors. Rather than adopting a 'computer says no' approach used by many lenders, the Society relies on manual underwriting to make sensible but fair lending decisions.
Based in Ipswich and serving a population in the East of England and further afield through its broker relationships, the Society is aiming its support at the growing number of small businesses operating throughout the region. Small businesses account for more than 95% of total businesses in the area, according to the New Anglia LEP, with data for Suffolk suggesting that there are more micro-businesses and self-employment in rural communities than in urban areas.
Paul Winter, Chief Executive of Ipswich Building Society, commented: "Too many credit-worthy borrowers with unusual circumstances are overlooked by mainstream mortgage lenders and our view is that 'mortgage misfits', including the self-employed, freelancers and contractors, should have the same level of choice and access to the mortgage market as any other group."
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE