Self employed lending has undergone a revolution
Self employed lending has always been a beast to stay on top of, and mainly because of the variety of policies that lenders employ to consider self employed income – but its changing, becoming a little more user friendly and this is a great thing!
It used to be – we needed everything,
personal tax returns
and business tax returns
Business financials
All liabilities
The lot
And, the treatment of the income was complex also, lenders employ a variety of policies in regards the way they treat the income be it;
Average of last 2 years
Lowest year of the two
Lowest plus 20% of any increase
More recently, we have seen a shift in lender policies where lenders moved to
Relying more on the most current year which is great for growing businesses
Excluding liabilities on occasion
Adding back depreciation and non-cash expenses
This has been great in allowing more income to be considered for self employed people
And then.... there was a revolution
In the last year we’ve had lenders who – if your company or trust is looking after all of its own stuff and still paying you a consistent wage – can consider the wage you pay yourself on its own, backed up by payslips if you have them, or salary credits, or just your notice of assessments in cases.
This is such a dramatic change in the volume of information you’ve needed to collate to support your application as well as being more up to the minute reflective of your business and growth.
There is s till a huge variety of lender policies in play – and we always say you have almost no chance of being approved by walking into your local branch because of this - however the playing field is a lot greener now for sure.
If you're self employed and you haven't reviewed your lending in a while or you'd love to buy a new place / invest / upgrade reach out, now is the time to chat!
