Importance of Income Flexibility
Offering flexibility for borrowers is of the upmost importance for specialist lenders like ourselves at Dudley Building Society. Whilst every lender has targets to meet and risk appetites to comply with, the end goal of helping borrowers achieve their homeowner dreams should always be considered.
The impact of the pandemic on the UK workforce was unprecedented, with many having to rely on alternative income streams that do not meet the usual definitions of standard full-time employment. This brings many challenges for borrowers with complex income streams looking to borrow funds for their dream home. These borrowers may subsequently have their homeowner dreams shattered by a one size fits all approach to income assessment.
We strongly believe that more unusual forms of income can and should be catered for, providing the applicant meets the requirements of an underwriter’s assessment. More complex forms of income do not diminish a borrower’s ability to repay their mortgage, and we have seen this within our own mortgage book.
Ex-pat borrowers in particular often earn high incomes, but if they receive salaries in less common currencies, they may struggle to find a mortgage to fit their needs. We have recognised both the reliability of ex-pat borrowers and their specific requirements, which is why we will consider all currencies - providing they are not on a sanctioned country list.
This flexibility does not end with ex-pats, as we pride ourselves on taking a common-sense approach to borrowers’ income streams, with an understanding of the difficulties that the pandemic has brought upon them. All cases submitted to us are manually underwritten by a qualified underwriter, who looks at individuals’ circumstances to build a real-life picture on which to base a decision.
At Dudley Building Society, we have built our intermediary proposition around manual underwriting, because we believe it is the only way to ensure that every mortgage enquiry and application can be treated with the care and understanding it requires.
We maintain a robust risk profile, but that has not stopped us and other like-minded lenders reassessing our credit policy and criteria while maintaining the highest standards of sensible lending. From a flexibility point of view, that has meant we can provide support for introducers who would otherwise struggle to place mortgages with the following income types – contractors, benefit recipients, the self-employed and zero-hour contractors.
Understanding the difficulties that borrowers with more complex income streams face is important for advisors and lenders alike, as it enables us to help struggling applicants feel less alienated by the prospect of obtaining a mortgage offer.
Our ability to offer solutions to those with more complex situations continues to be demanded, and we hope that others will also continue to offer flexibility to help borrowers realise their homeowner aspirations.
Jeremy Wood, Chief Executive Officer