Banks and building societies are asking self-employed borrowers to provide more information when they apply for a mortgage to confirm if their businesses have been affected by the coronavirus.
For sole traders, partnerships, LLPs with less than 200 partners, and limited companies, HSBC is asking borrowers to provide their latest 90 days of business bank statements in addition to the standard application forms and company accounts. The bank statements will need to be dated within a week of the application start date.
Where an applicant's turnover has been impacted by the coronavirus, it may take longer for an underwriter to agree the mortgage application.
Aaron Strutt, product director at Trinity Financial, says: “Many of the lenders have made changes to the way they assess self-employed applications so borrowers can expect to provide more documentation than normal if they apply for a mortgage.
"Lenders like Coventry Building Society will ask for more information from the self-employed and the provider will only accept applications from businesses that continue to actively trade.”
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HSBC has asked customers to notify the bank if they are in the process of getting a mortgage and their income has reduced. This is either through contracts being put on hold for the self-employed or through redundancy or reduced hours for employed people.
HSBC has said if borrowers proceed and their income has changed it could potentially result in detrimental impact on their credit rating or them potentially losing their home.
The bank said: "The customer must consider whether they wish to proceed with the application if they are concerned about their financial situation, or if they would prefer, they can come back to us when they have a better understanding of any impact to their finances."