Empowering the Freelance Economy

Saffron opens up mortgage market to self-employed with just one year’s worth of accounts

There are self-employed mortgage lenders out there offering competitive rates but they are often found through intermediaries. Photo by RDNE Stock project via Pexels
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For those working on a self-employed or contractor basis, securing a mortgage in the current economy of rising interest rates and a cost of living crisis is getting more difficult. However, UK building society Saffron says it is making mortgages more flexible for the self-employed and First Time Buyers.


Rising interest rates have caused household wealth across Britain to fall by £2.1 trillion over the past year, according to a report by the think tank Resolution Foundation.

The Bank of England’s rapid rate-rising cycle since late 2021 has caused mortgage rates to rise, house prices to fall and, critically, the price of government and corporate bonds to plummet.

The combo of factors is wreaking havoc on everyone’s finances. Not surprisingly that the self-employed and contractor workforce feels left out in the cold come time to apply for a mortgage as many High Street banks see them as a higher risk, despite their ability to increase revenues by pitching for new work.

The good news is that some lenders are showing that they better understand the value of self-employed applicants and want to provide more flexibility when it comes to mortgage deals.

Self-employed v. contractor mortgage deals

Saffron is offering mortgage deals to applicants with two or more years of trading accounts across its full range of products, with only a year of accounts required for its specialist self-employed range.

The lender which offers mortgages through intermediaries offers self-employed and contractor mortgages.

The loan-to-value ratios are as high as 90%, which is attractive for First Time Buyers or those looking for a more expensive home. For example, its Self Employed 90% LTV Two-Year Discount Mortgage offers an initial rate at the time of writing of 6.09% (variable), which then reverts to SVR minus 1.00% which is 6.99%. The arrangement fee is £499 with an Average Price for Change (APRC) of 7.03%.

Contractor criteria is different to self-employed applicants whereby contractors must have 2 years’ employment history and a minimum of 3 months of contract history.

Day one contractors are considered on a discretionary basis with a minimum of 1 year work experience in their contracting sector. Income is calculated as Daily Rate x 5 x 48. One of the lower rate deals it offers contractors is its Contractor 60% LTV Two-Year Discount Mortgage which offers at the time of writing an initial rate of 4.99% (variable) reverting to its SVR minus 1.00% at 6.99%. The arrangement fee is £499 and APRC is 6.76%.

“Those with significant mortgages will be hit by these major changes. But there are winners too from a shift to a world of higher rates and lower wealth,” says Ian Mulheirn, Research Associate at the Resolution Foundation.

“The future path of interest rates is very uncertain,” he says, Continuing, “The current surge could be a blip, or herald a new era for the UK. Either way, policymakers should focus more on whether and how to insulate households from wild swings in their fortunes from these forces well beyond their control.”

If you are an umbrella company contractor your application process will be different and is explained in some detail here.

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