The High Street Lending Model – why it sucks for contractors
Posted by John Yerou
on January 13th, 2015 18:43pm in
Last Updated on August 12th, 2020 07:00am.
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 script writer 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that not only contractors and freelancers know what they’re up against, but that banks also know how ridiculous their outdated policies are.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.
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 was 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 home.
We have people come to us every week desperate because one bank or another has let them down. An agreement in principle is one thing. A lender who can put a mortgage offer on the table for you? Another 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, then call at the last minute to tell you there’s been 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.
To wrap up, would a run-of-the-mill video have attracted as much attention? No, that’s why we went the tongue-in-cheek route knowing that the use of 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 they just don’t get it.
We knew the risk. And before we pressed the ‘publish’ button, 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 by your side to land one on the hapless advisor.
Please, read into the video the message, take it on board and take it with you. If you have a comment, feel free to let rip, good or bad. In the meantime, here is “The High Street Lending Model” for your viewing:
Author: John Yerou
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.