Santander Launches Mortgage Calculator For Self-Employed As Brokers Ask More Banks To Follow
Santander will launch a mortgage calculator for independent borrowers whose businesses have been affected by Covid-19.
Starting Tuesday, brokers will be able to exclusively use the calculator for ‘Covid-affected’ customers who wish to ignore their 2020/21 accounts because the pandemic has damaged their income, to find out how much the bank is willing to lend.
The bank has changed its lending policy to exclude the 2020/21 tax year for independent borrowers who have suffered an extraordinary loss of income.
Covid-affected, Santander said, also refers to borrowers who have relied on one of the government’s support measures such as the Self-Employed Income Support Program or the Coronavirus Business Interruption Loan Program, or a tax deferral.
The lender said it would take into account future liabilities related to Covid-19 and they would be treated as a business commitment.
An additional layer of criteria means that to be accepted under Santander’s Covid-19 accounts exception, businesses must have been in business for at least 90 days after reopening.
Santander revealed its criteria changes to brokers yesterday and was praised by the brokerage industry for its approach.
However, there are concerns about the impact it will have on the bank’s service levels.
Business as usual for 2020/21
If borrowers want to use their 2020/21 profits, business development mortgage division chief Graham Sellars said business was business as usual and brokers didn’t need to call. unless they need help.
Talk to Mortgage solutions, Sellars (Photo) said: âHalf of Santander’s independent borrowers have seen no impact on their businesses.
âThe other half has been affected in different ways, by being closed throughout each lockdown like hairdressers, for example, or simply losing income during the first lockdown like traders, for example. Regardless of the extent of the damage, we view 2020/21 as an aberration, not a normal trading period. “
Brokers want to see more lenders follow Santander’s lead.
Simon Butler, Head of Mortgages at CMME, said: âThis is a strong indication from one of the UK’s biggest lenders that they value the self-employed sector.
âThe past year has had a negative impact on the finances of many small businesses and the attitude of the mortgage industry as a whole has at times been overly cautious, rather than favorable to business owners.
“We hope other lenders take note and look at their individual criteria as there are many ways to approach adversity, as Santander has shown this week.”
Jane King, Mortgage and Equity Release Advisor at Ash-Ridge Private Finance, also welcomed the move, but had reservations about how the policy would be applied in practice.
âIt’s a good idea overall. The self-employed have had a somewhat difficult year for reasons beyond their control due to current conditions, so this will allow them to provide figures on when their businesses were operating under normal trading conditions.
“Having said that, Santander will still have an idea of ââwhat its future business is likely to be after Covid and not all will be accepted, but I think it’s a fairer way of judging income and so I think it’s a very pragmatic approach. “
Sebastian Murphy, head of mortgage finance at JLM, feared that Santander’s eagerness for brokers to discuss cases and a move to more manual underwriting would put its service levels under pressure.
âThis is a really positive step and I hope other banks will join them, but communication with brokers could have been better.
“I’m concerned that this move will reduce their service levels to the levels we faced when they took out self-employed claims last year.”
Until the calculator was active, the bank asked brokers to call it to discuss cases affected by Covid.
Borrowers who do not use a broker will need to contact the bank to discuss their situation.
Samantha Partington is a freelance commerce and consumer journalist who writes on real estate and personal finance. Previously, she worked for the Daily Mail and Property Week. She is the former associate editor of Mortgage Solutions and editor of Specialist Lending Solutions. Prior to becoming a journalist, Samantha worked as a mortgage broker and most recently for a mortgage, bridge and secured loan lender. Samantha is CeMAP qualified. Follow her on Twitter @ SamJPartington1.