Self-employed workers who received grants from the government during the COVID-19 pandemic are among those to have been refused mortgages by some of the UK’s biggest high street banks. Reports indicate that some banks see those who have received government grants or been furloughed as too high risk for a mortgage.
NatWest and the Royal Bank of Scotland (RBS), two of the UK’s most prominent high street banks, are both refusing mortgage applications from self-employed workers who received government grants under the Self-Employment Income Support Scheme (SEISS).
Two other lenders, TSB and Yorkshire Building Society, have both said that they would need to be presented with evidence of the applicant’s business having sufficiently recovered from the impact of COVID-19 before approving their application.
Meanwhile, some banks that are accepting mortgage applications from SEISS recipients are charging larger than normal deposits. Santander is requiring a minimum deposit of 25 per cent from self-employed people, while Metro Bank says that any SEISS recipient applying for a mortgage will need to pay a deposit of 20 per cent or more.
Due to the fact that lenders typically assess the previous two years’ of a mortgage applicant’s accounts before making a decision, it seems likely that self-employed workers will see their mortgage applications affected by the pandemic until at least 2023.
Andrew Montlake of mortgage broker Coreco said: “We are calling on lenders to look at how businesses were performing before the pandemic, as a more likely guide for how they will perform afterwards.”
Meanwhile, a spokesperson for the Financial Conduct Authority (FCA) has said that SEISS grants (or similar COVID support) should not be a reason, in themselves, to disqualify a person from credit. The spokesperson added that: “Lenders are required to treat customers fairly when they apply for a mortgage.”
