Our generous affordability is aimed at helping the self-employed and borrowers with non-traditional circumstances

For many people who work for an employer, the idea of being your own boss can be very appealing. But while being self employed can allow you more freedom and a higher earning potential, it can also be notoriously tricky to secure a mortgage, especially when you’re starting out.

Indeed, in a recent feedback session with intermediaries, one broker we spoke to said that: “The self-employed are looked at as the lepers of the mortgage market.”

And while not necessarily a new problem, the covid pandemic has exacerbated the issue with many lenders now asking to see additional information and documentation on self-employed applications.

At The Nottingham, we don’t want to penalise those with growing businesses, or those that struggled during the pandemic. So, while we usually like to see three years of trading figures*, we’ll only assess earnings from the last 12 months, within a 20% fluctuation. Also, we don’t normally require sight of accounts, unless specifically requested by an underwriter. 

Generous and fair affordability

And while not specific to self-employed borrowers, our generous and fair affordability is designed to help more homebuyers achieve their property goals. For example, we make our affordability assessment based on real-time bank statements, rather than ONS data and we’ve recently increased our maximum Loan to Income ratio (LTI).

We know how challenging the current economic climate is for homebuyers, and we’re hoping that by increasing our residential LTI from 4.5x to 5.5x we’ll be able to help more borrowers.

The new LTI increase is applicable to households with a gross annual income of over £75,000. This means households with a gross income of £75,000 can now borrow up to £412,500, a significant increase from the previous maximum of £337,500.

Our current affordability tests – covering income, expenditure and stressed interest rate – will remain in place to ensure that applicants do not borrow more than they can afford to pay back, risking mortgage defaults.

Sales director Alison Pallett said:

“It’s imperative that we move with the ever-changing needs of our customers, whether they’re employed or self-employed. We know that homebuyers are facing an extremely challenging economic environment, and we are committed to helping buyers navigate this period.

“We also recognise that rapid changes to the way we live and work mean that borrowers with non-traditional circumstances can find it difficult to get the mortgage they want. We hope that alongside our affordability criteria, increasing our LTI ratio will help more homebuyers on their journey."

Read more about our generous affordability

*Our minimum requirement is two full years’ trading figures plus a projection based on at least six months trading for the third year. Their accountant will need to provide a satisfactory reference/explanation and a six-month projection.