Borrowers with non-standard incomes, unusual properties or international circumstances should not automatically be treated as difficult to place, according to Saffron for Intermediaries.
The lender said changes in the way people work, invest and structure their finances mean mortgage cases are becoming harder to fit into traditional categories.
Contractors, company directors and borrowers with several income streams can fall outside conventional affordability models, while expats, visa holders and properties such as HMOs, annexes and self-builds may require a more detailed assessment.
Saffron said these circumstances do not necessarily make a borrower or property unsuitable for mortgage finance, but they can make early discussions between brokers and lenders more important.
COMPLEX INCOME
The lender said borrowers earning the same headline income can present very different affordability profiles depending on how that income is generated.
Its criteria can include self-employed applicants, company directors, contractors, CIS workers and professionals with multiple income streams. Depending on individual circumstances, Saffron can consider applicants with one year’s accounts, assess some contractors and CIS workers on an employed basis, and assess company directors using salary plus profit after tax.
Leanne Turner from Saffron’s BDM team said: “Two clients earning the same amount on paper can have very different circumstances, so understanding how that income is generated and how sustainable it is really matters. Complex income does not automatically make somebody a more difficult borrower.
“Sometimes the challenge is simply finding the right way to evidence what they actually earn.”
Saffron also argued that loan-to-income ratios should not always be viewed in isolation, particularly where higher-earning borrowers have borrowing requirements above conventional multiples but sufficient disposable income to support the loan.
Alice Waites from Saffron’s BDM team said: “A loan-to-income figure is useful, but it is only one part of the affordability picture. For some higher-earning clients, a hard ceiling can stop a case before their actual disposable income, expenditure and wider circumstances have really been considered.
“Ultimately, it’s important to consider affordability without loan to income multiple caps, to ensure the most suitable solution can be found.”
Saffron’s Premier Income proposition has no maximum loan-to-income cap for eligible borrowers, with affordability assessed according to the applicant’s individual circumstances.
PROPERTY TYPE
The lender said property characteristics can be just as important as borrower circumstances in determining whether a case fits mainstream lending criteria.
Self-build projects, annexes, larger plots, HMOs, listed buildings and some non-standard construction types can require additional scrutiny, although Saffron said condition, use, valuation and future marketability may prove more relevant than the property category itself.
Laura Barrett from Saffron’s BDM team said: “There is a temptation to see an unusual property type and assume it will be difficult to finance, but the detail matters. An annexe, acreage or a different construction method does not tell you everything you need to know about a property.
“Understanding what the client is buying, how it will be used and how marketable it will remain is much more useful than looking at the label alone.”
Saffron can consider self-build and custom-build homes, significant refurbishment and knockdown-and-rebuild projects, HMOs, multi-generational properties, homes with annexes, listed buildings and selected forms of non-standard construction.
BUY-TO-LET AND INTERNATIONAL BORROWERS
The lender also said brokers should avoid assuming that first-time buyers cannot enter the buy-to-let market.
Some prospective landlords are choosing to invest before buying their own home, while others are using limited companies when building property portfolios.
Leanna King from Saffron’s BDM team said: “Not every landlord starts in the same place anymore. We increasingly have conversations about people entering property investment through a route that might once have been considered unusual.
“The important thing is to understand the client’s circumstances, experience and plans rather than assuming that not already owning a home automatically closes the door.”
Saffron can consider first-time buyers entering buy-to-let, alongside landlords purchasing either personally or through a limited company.
The lender said international circumstances are also becoming a more routine part of mortgage advice, with brokers increasingly encountering British expats buying or refinancing UK property as well as foreign nationals living and working in the UK on visas.
Waites added: “People’s careers and family lives are much more international than they once were, and mortgage advice increasingly has to reflect that. The important thing for brokers is to establish the detail early; where somebody is based, their residency status, how they earn and what they are trying to achieve.
“Once you understand those points, what initially looks like a complicated case can often become much easier to assess.”
Saffron offers residential and buy-to-let mortgages for expats across a range of countries, subject to lending policy, and can consider applicants on a range of suitable visa types. Eligible visa applicants are not subject to a minimum remaining visa term.
Lee Williams, national sales manager at Saffron for Intermediaries, said: “The mortgage market has spent years talking about ‘complex borrowers’, but in reality many of the circumstances that sit behind that label are becoming increasingly normal.
“People have more varied careers, different sources of income, international lives and ambitions for properties that do not always look like the traditional home. Brokers are having to deal with that reality every day.
“That makes the conversation between broker and lender more important than ever. Ensuring that all of the information about the client’s case has been thoroughly collected, will help the adviser to apply different lenses to their circumstances to understand what the best outcome could be for their personal circumstances.”
