How we are helping self employed, first time buyers, post Covid after they were sadly let down elsewhere. We recently helped a young couple secure their first home despite being let down by the first broker that they had approached. The challenge was that Mr is a musician, and Mrs was also working reduced hours due to Covid.
Our clients, looking to buy for the first time, had a very reasonable deposit, but were struggling as they had an application declined from a lender that took a very negative view on the sustainability of Mr’s income. Mrs was working 4 days instead of 5, but was due to return to full time shortly. They had otherwise perfect credit and on paper, sufficient income to support the loan.
What was needed?
Lenders are taking a sector by sector approach, which is understandable in the current climate. However, it is a very blunt approach to simply decline someone has they were a musician as was the case here. Moreover, the broker they were dealing with seemed a little lost by this and was unable to find a solution. Hence being referred to us by a friend who had a positive experience in how we secured a new loan for them. With a first time purchase hanging in the balance, we were quick to talk to the clients and help out.
What was the challenge?
Clearly all income is heavily scrutinised at present. Lenders are taking quite different stances on what is allowable income. Some banks, as per the first one that had been approached here is simply not accepting self employed income if you are in a ‘high risk’ sector due to the impacts of Covid.
What is defined as ‘high risk’ is at their discretion, and no clear guidance has been given, but it will mainly be sectors like hospitality, travel, entertainment etc. will be declined off the bat. However, other lenders will tread with caution for such applications, but they take the time and effort to underwrite such cases and where the income is sustainable, they are happy to offer a loan.
How we provided the solution
Joanna Ziou, Associate at Rose Capital Partners, spoke with the client to discover their precise situation and from the conversation it was clear that the clients had a sustainable income. Joanna is experienced in helping self-employed people obtain mortgages in complex situations. She collected the relevant supporting documents, conducted some in-depth research and spoke to various underwriters to ensure the clients would not be let down further down the line.
The clients were delighted with the outcome. Not only did we find a new lender at a comparable interest rate, the lender was agreed in 24 hours! It just shows what impact placing a case correctly, with the right documentation does. The devil is always in the detail, so we were able to foresee problems and pick the right lending partner so our clients can become proud homeowners.
What was the rate
The rate was 1.59% fixed for 2 years.