What it means and how to retain an ability to finance deals.
Just Do Property Interviews Mat Rees BSc (Hons) MSc - Chief Executive Officer at Beneficial Life (London) Ltd
You can watch the 5 minute video here or read the transcript below.
Beneficial Life (London), is a fast-growing network in the financial services market of the UK. One of the topics that is highly prevalent in the news at the moment is MMR.
MMR is basically the Mortgage Market Review. To put it simply, it’s the knock on effect that results in lenders having to do a lot more checks, a lot more diligence on their clients and, ultimately, the brokers have to as well.
So, what are the implications for self employed people or people who might not have traditional PAYE and payslips?
It can be difficult for people to get a mortgage if they don’t have a traditional form of income - a traditional way of proving their income. So, for example, someone that’s been self employed for a year or two years, and they struggle to be able to prove to a lender what their income is no matter how high the income, no matter how secure the job may seem, then they still might not be able to get a mortgage, as the ex boss of the FCA found out, I believe, last week, when she got refused a mortgage for the same reason.
What solutions are there for people who are outside of the traditional PAYE system, in terms of finding access to mortgages or finance?
There are deals available for them, it’s a case of being able to go to the right lender, which is because of the fact-finding process, so, what our advisers do is they take the customer through a fact find, they go through all their financial information and, providing the customer gives accurate information to the adviser, the adviser can direct them to a lender which will consider their circumstances. For example, if they’ve been self employed for a year, but they’ve got continuous employment over the last three years, that could be something that would help them get a mortgage.
Likewise, if they have a part time job and a full time self employed role, then that can be taken into consideration as well. Some lenders and banks and building societies will take into account rental income, part time income, and certain benefits, such as tax credits, as long as we know the combination of that person’s income and we know what is provable and what is documented, we can present that to the lender and it can result in a positive outcome for the customer.
So, the message is very loud and clear here, there is no such thing as a cul-de-sac. There are openings, there are opportunities.
Are there ways of still securing finance if you come from that particular predicament, let’s say, in terms of your employment status?
Absolutely, and the thing is, somewhere in the region of 30% of the working population of the UK is self employed or has a non-traditional income, so 70% are PAYE, 30% aren’t, that’s a big proportion of the borrowing public.
Okay, now I know one of the ways that we can track yourself down at the moment Mat, for yourself and your colleagues, is through the Just Do Property web portal. Talk us through why you decided to get involved with Just Do Property?
Because a lot of the people in the UK are either landlords or want to consider being a landlord, Just Do Property was an obvious choice. Being a landlord can be very lucrative, it’s also a minefield when it comes to everything, whether it’s talking about mortgages, finance, whether it’s talking about property law, tenants etc, so we find it quite an interesting area to work with.
Landlords usually have more obstacles because they’ve typically got more than one mortgage to begin with, some of them have got five already, some of them, have got portfolios, some of them have got high rise flats, so it’s not your typical lending as it would be for maybe a next time buyer or somebody who wants to remortgage their own home. We have specialist products available for landlords. Again, as long as we know the circumstances of the customer, we can usually find them a way around doing what they need to do. Sometimes we can save them money, sometimes we can find them the means to borrow more money to either remortgage or build their portfolio, and that’s what we like doing.
or completing the form on Mat’s expert page https://www.justdoproperty.co.uk/mortgages