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Hope for self-employed loans

Nationwide and Platform are both developing new mortgage products for self-employed people in light of the FSA’s mortgage market review proposal to ban self-certification loans.

Speaking at a Money Marketing mortgage round table event last week, Nationwide for Intermediaries head of corporate accounts Paul Howard said the company was working on products “specifically for the self-employed in a post-MMR environment”.

Howard said Nationwide would be looking at ways of proving income by using customers’ bank accounts but warned that self-employed borrowers’ propensity to minimise income for tax purposes would make it more challenging to prove affordability.

He said: “We are going to end up having to establish mortgage affordability and I think that will affect quite a few self-employed people because they will have minimised their income in order to minimise their tax bill.”

Platform pulled out of the self-cert market in November, stating that the MMR made it “unfeasible” to offer the products in their current form. It now says it will seek to design new products to meet the needs of self-employed borrowers. Sales and proposition director Lee Gladwell says: “Platform is now designing a product for post-MMR.”

He said one of the big challenges is that the mortgage market review will require expenditure verification as well as income verification.


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. How about taking gross income into account for a start. Is it fair to look at the net dividend income (ignoring the fact that corporation tax has been paid) for directors of a ltd. company? Usually the dividend income will make up a far larger portion of income than the gross salary taken?

  2. Self Cert was always asking for trouble surprised it took so long for it to happen the best way is to have a declaration of affordability. With self employed people why not work of the gross profit instead of nett as per gross earnings for employed people

  3. A requirement for say 9-12 months business and personal bank statements would also help to show that the applicant has the turnover/income as stated.

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