Can freelancers who claimed SEISS grants get a mortgage?

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All through the coronavirus pandemic, many self-employed workers applied for the Self-Employment Income Support Scheme -- or SEISS – for financial support.

But banks and building societies have since taken widely different views on sole traders and freelancers who took one or all five SEISS grants, when it comes to them applying for a mortgage, writes John Yerou, CEO of Freelancer Financials.

Why lenders are nervous

To qualify for a SEISS grant, you needed to confirm that your turnover and profits have been adversely affected by the pandemic. This alone, quite obviously makes lenders nervous!

Even though a SEISS grant does not impact your credit score directly, it’s no hidden secret that some self-employed people have experienced difficulty securing new mortgages with lenders.

The good news is that many lenders over the past few months have relaxed their strict lending criteria towards borrowers who utilised a SEISS grant.

Santander, the pioneer

Santander led the way by changing its lending criteria to exclude the 2020/21 trading accounts for self-employed borrowers whose earnings were affected by the pandemic. A few other lenders like Bluestone Mortgages have also followed Santander’s example.

Other lenders have also softened their criteria, like NatWest, Barclays and HSBC. Such lenders will now accept self-employed borrowers who have historically claimed grants under the covid scheme.

Tips for getting a mortgage if you claimed a SEISS grant

Make sure your mortgage application is submitted to a lender that is open and flexible to borrowers that have taken SEISS grants.

Be aware, your chances of mortgage approval after claiming SEISS could depend on which lender you approach. Indeed, there are still a number of mortgage providers that are wary of lending to anyone that applied for a SEISS grant.

That’s why we are still receiving enquiries from self-employed borrowers who have been declined, typically because their mortgage application was submitted to a lender that was placing extra scrutiny and rigorous checks on SEISS users.

Case-by-case assessment

At the time of writing, a number of mortgage lenders are assessing borrowers who have claimed SEISS monies on a case-by-case basis, so mortgage approval if you received a SEISS grant isn’t clear cut.

That said, an experienced mortgage broker who specialises in mortgages for self-employed people will know exactly which lender to approach.

We are finding that eligibility criteria can vary from lender to lender.

Mortgage requirements for SEISS grant recipients

But these are some of the extra requirements you might be asked to provide as a SEISS user going forward for a mortgage:

  • A minimum of 3-6 months’ bank statements to provide evidence trading has resumed

  • Two years accounts, SA302 calculations and overview (though this can vary)

  • A detailed explanation of why you needed to take out a SEISS grant

  • Confirmation that your deposit is not made up of SEISS funds

  • A copy of the approved SEISS grant(s), showing duration and amount

  • Be prepared to evidence that your income is now stable

  • Get advice from a specialist in contractor mortgages before making an application

  • Be prepared to provide ‘pre-covid’ evidence to demonstrate that as a self-employed person you had a thriving sole trader business (i.e under normal circumstances).

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Final thought

Freelancers, remember -- the right advice can sometimes be the difference between finding a great deal and actually getting approved, so reach out to us if you’re a SEISS grant recipient seeking a mortgage.

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