Saffron for Intermediaries has urged brokers not to dismiss complex income cases as changing employment patterns leave more borrowers outside traditional lending criteria.
The lender said self-employment, contracting and multiple income streams were increasingly common, but misconceptions could result in brokers assuming otherwise viable applications were unplaceable.
It has identified five persistent myths involving self-employed accounts, multiple incomes, unconventional assets, unusual working patterns and historic credit issues.
Saffron said manual underwriting allowed these factors to be examined within the context of a borrower’s wider financial position rather than through automated assessments alone.
SELF-EMPLOYED AND MULTIPLE INCOMES
Self-employed borrowers do not necessarily require two “perfect” years of accounts, according to the lender.
Reported figures can be influenced by reinvested profits, future revenue and how directors structure their remuneration, none of which necessarily indicates that a business is financially weak.
Saffron’s underwriters can work with borrowers and accountants to understand the figures, while shorter trading histories may also be considered where supported by the wider application.
The lender said employed income, self-employed earnings and contracting revenue could also be combined where brokers provided appropriate evidence, including payslips, contracts, bank statements and accountants’ references.
ASSETS AND WORKING PATTERNS
Unconventional assets such as cryptocurrency do not automatically result in an application being declined, Saffron added.
Its underwriters consider a customer’s wider finances and track record when assessing whether non-traditional assets could support an application.
Long commutes, recently started contracts and unusual working arrangements may cause problems within automated affordability models but can also be examined individually.
CREDIT BLIPS NEED NOT CLOSE THE DOOR
Saffron said rigid calculations could understate variable income, while minor historic credit problems could continue to affect applications despite having been resolved.
Manual assessment enables income patterns and previous credit issues to be considered in context rather than through fixed formulas.
Lee Williams (main picture), national sales manager at Saffron for Intermediaries, said: “Many borrowers now have circumstances that fall outside traditional lending criteria, and the key question is whether a lender is willing and able to understand those circumstances.
“Complex does not mean impossible. It means the case needs a lender prepared to look beneath the surface.
“Our message to brokers is simple: before assuming a case cannot be placed, come and talk to us.”
