August 28th, 2014
Contractor Mortgages Made Easy are delighted to announce that they have secured bespoke contract-based underwriting with one of the largest building societies in the UK.
In yet another move by a large UK lender to recognise contractors as a low lending risk, Leeds Building Society (LBS) have announced that they have designed specific criteria on which to assess professional contractors.
This departs from their typical model of borrowers being assessed under either 'employed' or self-employed', categories which have usually meant a contractor will have large parts of their income ignored by a lender.
The contractor-friendly criteria launched by LBS is ready to go live from Monday 1st September, and plugs some of the gaps between criteria for longer serving lenders to the contractor community. Main highlights include: minimum contracting experience of only 12 months, lower minimum income than other 'contractor-friendly' lenders, and more tolerance towards gaps between contracts.
The move is seen as a watershed moment for mortgage availability for contractors, as it comes from a building society that has had a reputation for cautious and risk-averse lending. Taj Kang, Business Development Director at specialist broker Contractor Mortgages Made Easy, welcomed the new entrant and examined what they would bring to the space.
“Leeds Building Society have had a reputation for innovative mortgage products that meet borrower demand where other lenders have feared to tread.
"This is demonstrated by the Society's 10 year fixed rate Help to Buy products, and also their 0% fixed rates in recent months. Despite the product innovation, there have been very few changes to the core lending rules.
“The fact that they have embraced contracting as a low-risk, and changed their criteria to service borrowing needs for this type of professional, speaks volumes for a large building society. Even though building societies are usually wary of taking risks regarding who they lend to, we do not believe that contractors present a higher risk than permanently employed borrowers, and it's great to see that LBS agree with this.”
LBS undertook several months of due diligence this year to arrive at the proposition, liaising with a couple of select firms in order to understand the market. Initial indications are that there will be two distinct tiers of products aimed at contractors, with fixed offset mortgages also being available to contractors under their new policy.
“We were proud to be involved in the consultation with LBS regarding contractor policy and product design, and we commend them on formulating a workable set of rules that meet the demands of the flexible professional workforce of the UK, whilst also managing risk sensibly.
“Where we see LBS helping contractors the most, is for those who have had gaps between contracts, who work in occupations where the annualised contract income is between £50,000 – £75,000, and also for those looking for a flexible mortgage whilst also having an element of protection from increases in future rates.
“As these products will not be available directly from LBS, or indeed from most brokers, it is vital that any contractors who fit into any of the above categories speak with us at their earliest opportunity so we can assess eligibility.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080