Most mortgages by high street banks are targeted at borrowers who have a full-time job with a regular monthly income. This makes it difficult for the self-employed, the retired and people with more than one income source to obtain a mortgage. Now, many lenders are making it easier for people with more complex financial situations to obtain a mortgage.
After the financial crisis of 2008 that many blamed on subprime mortgages, lenders tightened up the rules on mortgage applications. These favoured people with a full time fixed salary job. More complex situations such as self-employed freelance workers whose income varies each month and retired people living on non-fixed rate investments found it more difficult to prove that they could afford the mortgage repayments.
Large lenders tend to use technology to process vast numbers of mortgage applications quickly. Smaller lenders often have the time to carefully consider a complex application and make a judgement on individual cases rather than being driven by inflexible rules.
A number of lenders now specialise in lending to borrowers who fall outside the norm of a full-time wage earner. Some larger lenders, such as Halifax, will now consider applications from the self-employed.
Whilst complex mortgages are becoming easier to find, borrowers still need to satisfy the lender that they can afford the mortgage payments over a long-term period. The self-employed can also take out mortgage protection or income protection insurance to cover mortgage payments if they are sick and unable to work.