Lloyds Banking Group has highlighted that self-employed borrowers are likely to need more help from brokers as more emphasis is put on income verification and other underwriting.
The lender noted that the fallout from the Covid-19 effects meant lenders would be looking to get a much deeper understanding of individual circumstances.
Speaking on Mortgage Solutions Television, Esther Dijkstra, director of strategic partnerships at Lloyds Banking Group said elements of self-employed income would be referred to underwriters.
“That’s where we also need the brokers to support us in providing that information so we can see how it has impacted those self-employed borrowers,” she said.
“It’s the long-term history of their business, funds to meet their fixed commitments like rent and utilities, how likely are they going to return to normal profitability.
“So it’s really crucial that intermediaries support us on that journey to make sure we can support those customers as well.”
Mike Jones, managing director of intermediaries and specialist brands at Lloyds Banking Group, joined Dijkstra in the discussion and added that the impact of payment holidays were not trivial.
He noted this would involve lots of people making financial decisions they had never had to consider before, and that lenders would be taking holidays into account on future lending decisions.
“We all know that people on a payment holiday are not going to have their credit score affected, but importantly that doesn’t mean that it won’t be a factor taken into account by any other future mortgage conversations about a new purchase or remortgage,” he said.
“So this is not a trivial thing for people to get right and I do seriously think that it’s a big job for lenders to deal with the volume of this but also for brokers to try to help sort it [for customers].”
He added: “I think there’s a great role for brokers in that, and a great way for brokers to build relationships with their customers.”
“We all know that people on a payment holiday are not going to have their credit score affected, but importantly that doesn’t mean that it won’t be a factor taken into account by any other future mortgage conversations about a new purchase or remortgage,” he said.
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