Income Assessment Change For Self Employed Mortgage Applicants

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June 25th 2022
Tax Week 12
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Income Assessment Change For Self Employed Mortgage Applicants

The lender Santander is to base applicant income on earlier tax periods for those affected by pandemic.

Starting later this month, mortgages offered by high street bank Santander will have income assessment adjusted for borrowers affected by the pandemic.

Earlier tax periods will be assessed for those who saw, and possibly continue to see, drops in business due to restrictions placed in controlling the spread and growth of the pandemic.

The accounting period for 2020 to 2021 will be ignored and instead income will be judged on the previous accounting periods from 2018/19 and 2019/20.

Self-employed borrowers who saw moving plans frozen due to the various bits of uncertainty over the previous 15 or so months will welcome the changes, allowing a fairer view of their business and income multiple.

The negative side of the changes to assessments will be the consideration for any business support loans that a business has taken on - schemes such as bounce back loans that offer government supported low-interest loans to struggling small businesses. The lender will also be looking at any tax bills that have been deferred as a future liability.

Self-employed income drops will be deemed as pandemic-impacted, as will those who have applied for and received grants such as the Self-Employed Income Support Scheme.

The changes come as the lender looks to launch its government-supported 95 percent mortgage products. The scheme that was unveiled in the 2021 Budget unfortunately will not be available to self-employed borrowers. Whereas Santander have not unveiled their interest rates for these new mortgages, competing bank Halifax has published their 95% LTV mortgages - the lowest rates start at 3.73 percent rising to 4.2 percent for a five year fixed option.

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