The High Street Lending Model – why it sucks for contractors

We've had mixed reviews of our video highlighting the problems self-employed people face looking for mortgages on the High Street. And, to be honest, we fully expected a reaction. Yeah, we weren't disappointed. But we stand by what we say in the video - it needs shouting from the rooftops.

What we didn't want was another boring 'put your employee on the spot answering a mundane question' type video. There are enough of those around to bore us until the next millennium.

So, we went for it. Hired actors, a scriptwriter and a video production team to amplify an indelible message. The underlying theme being that, when it comes to contractor mortgages, High Street lenders suck.

The result is a professional video that delivers a very apt message for contractors and mortgage providers alike. Whether you like the delivery media or not is your choice. But please don't ignore the message. It will stand you in good stead when the time comes for you to step onto/move up the mortgage ladder.

Banks and Building Societies are so out of tune

Some of the more interesting feedback alluded that the video should never have got past the ideas stage. I disagree.

It's important to us that contractors and freelancers know what they're up against.

But, we also want mortgage lenders to understand how restrictive their outdated criteria are.

With self-employment boosting the UK's employment figures, it's about time someone took a stance.

If those who control policy won't move with the times, pressure has to come from outside.

Freelancer Financials: agents of change

It's easy to take a step back and do nothing. But the fact is, we won't affect change unless we target the root cause of the problem. That's true in any scenario. But, in our case, the message is as much for the lenders as it was for our clients.

If it wasn't so important to us, we may never have begun the video project. But contractors need to know that, even if the High Street lets them down, they can still own their own homes.

Contractors do have alternatives to the High Street which simplify the mortgage application process. That's why we push contract-based underwriting wherever and whenever we can.

We have clients come to us every week desperate because one lender or another has let them down. Being able to get an agreement in principle is one thing. A lender who can put a mortgage offer on the table for you? That's another matter entirely.

Whose job is it to understand your earnings, anyway?

And therein lies the problem. Some lenders flat-out refuse your application. Others take it, give you an AIP, and then call at the last minute to tell you there's a problem.

They may not have done it on purpose. But, as Michelle says in the video, why should she have to familiarise herself with how best a lender can present her earnings to underwriters? It's not her job: she's a freelance model; it's the bank's job to get her a mortgage.

But they can't. Well: not entirely true. They could, if they took the time to understand her income better. That's what's causing both us and our clients so much consternation.

A means to an end: getting a reaction; getting people motivated to speak out

Here's the thinking: would a glib, run-of-the-mill video have attracted any attention? No. That's why we went the tongue-in-cheek route, knowing that using models would stir a few feathers.

It really isn't the freelancer or contractor's job to explain their earnings. In a perfect world, all in-branch advisors would recognise a self-employed person's affordability when they saw it. But those advisors and agents in the firing line simply don't get it. It's so frustrating.

We knew the inherent risk behind making a video like this. So, before we hit 'publish', we were totally prepared to stand by our decision.

I hope you can see the lighter side, even if mortgages do live in a darkened corner for contractors. And I bet, when you're sat there in front of the youth trying to work out what you earn, you'll picture Michelle. That kick she gives the punch bag? You'll wish you had her right in your corner to land one on the hapless in-branch advisor.

Please, hear the video message; take it on board; take it with you. If you have a comment, feel free to go for it, good or bad. In the meantime, here is "The High Street Lending Model" for your perusal: