Skipton building society has recently announced that they have finally returned to pre COVID-19 pandemic criteria for self employed contractors after over a year and a half of restricted and strict lending criteria brought in to avoid any potential risks surrounding the pandemic uncertainty.
They have announced that they will be changing their criteria to better accommodate self-employed contractor clients who haven’t previously been their demographic. So, what changes have Skipton actually made and why on earth should mortgage customers care?
Well, it seems that the notoriously strict lender has made some rather drastic changes kicking it off by announcing that with contracted people, they only require one month remaining on the current contract, reduced from a previous minimum of three months. This is great news for people who are either on one month rolling contracts (not uncommon in this day and age) or someone who is nearing the end of their current contract but hasn’t yet received their extension. Skipton’s specific criteria on their website has been updated to say the following factors apply to all contractor cases:
1) Minimum of 12 months contract history with a minimum of 2 years’ experience in the same field of work
2) Copy of 1 month personal or business bank statements evidencing the contract income and all household bills/personal credit
3) Minimum 1 month remaining on current contract
4) Minimum annual income (based on daily rate) of £50,000.
To calculate income we will use daily rate x 5 x 48 (weeks) irrespective of whether operating as a Sole Trader or through a Ltd company. Where there are gaps in the employment history the income calculation will be pro-rata (e.g. 8 week gap: income=5×40 weeks).
Skipton have also announced that they have made a change to their buy-to-let pound-for-pound remortages, which will all be calculated using an income coverage ratio of 125%, at 5.5% or 5% if it is for a 5-year fixed or longer.
Commenting on the new changes, John Scrivens, regional manager at Skipton Building Society for Intermediaries, has said: “We’re pleased to announce these changes to our lending criteria, to support brokers to help more of their clients own their own homes. It’s all part of our mission to make things easier for brokers.”
If you are a self employed contractor struggling with getting a mortgage, feel free to give our helpful team a call on 02088771169 to see how we can help you.