"Britain’s entrepreneurs are being locked out of home ownership because high street banks deem them too risky for mortgages under rules introduced in the wake of the financial crisis.
Business owners, especially those who have started a company in the past three years, find it almost impossible to convince high street lenders to give them a mortgage, because of rules introduced to reduce the risk on banks’ balance sheets.
As a result, many are abandoning dreams of home ownership, or are forced to accept deals with sky-high interest rates, with some turning to family to underwrite the loans.
Alastair Machin, from Stoke on Trent, who owns Chaffinch Document, which does secure shredding for regulated organisations, and Chaffinch Student, which helps overseas students move to the UK, has been seeking a mortgage for six months.
“The banks want three years’ accounts, but because we only file documents with Companies House long after the financial year ends, even the most recent accounts are long out of date,” he says.
“The banks are not adept at looking at accounts and are unwilling to forecast.”
His businesses turn over £250,000 a year, and Mr Machin, who is 28, had saved a 15pc deposit but was turned down by mainstream banks or offered crippling terms – more than 6pc – by secondary lenders.
His fiancée, meanwhile, was only asked to produce three months’ pay slips to qualify for a mortgage.
“Two years ago she was made redundant when Phones4U went bust (AtW's comment: ), so clearly it’s not always fair to assess someone solely on the risk of being self-employed,” Mr Machin says.
“I’m investing in my business, creating jobs, and adding to the economy, but I’m effectively being penalised for that (AtW's comment: just wait until you pay new dividend tax, then you'd feel totally shafted by an elephant...). We owe no debt to any third party, we’re profitable but the banks are only looking for people who tick the right boxes. It’s been frustrating and disheartening.”
Josh Turner, founder of Stand4 Socks, which helps charitable causes every time someone buys its colourful socks, was unable to secure a mortgage to buy property in Manchester. He was forced to buy with his father.
Source: British entrepreneurs locked out of home ownership after rules tightened
Business owners, especially those who have started a company in the past three years, find it almost impossible to convince high street lenders to give them a mortgage, because of rules introduced to reduce the risk on banks’ balance sheets.
As a result, many are abandoning dreams of home ownership, or are forced to accept deals with sky-high interest rates, with some turning to family to underwrite the loans.
Alastair Machin, from Stoke on Trent, who owns Chaffinch Document, which does secure shredding for regulated organisations, and Chaffinch Student, which helps overseas students move to the UK, has been seeking a mortgage for six months.
“The banks want three years’ accounts, but because we only file documents with Companies House long after the financial year ends, even the most recent accounts are long out of date,” he says.
“The banks are not adept at looking at accounts and are unwilling to forecast.”
His businesses turn over £250,000 a year, and Mr Machin, who is 28, had saved a 15pc deposit but was turned down by mainstream banks or offered crippling terms – more than 6pc – by secondary lenders.
His fiancée, meanwhile, was only asked to produce three months’ pay slips to qualify for a mortgage.
“Two years ago she was made redundant when Phones4U went bust (AtW's comment: ), so clearly it’s not always fair to assess someone solely on the risk of being self-employed,” Mr Machin says.
“I’m investing in my business, creating jobs, and adding to the economy, but I’m effectively being penalised for that (AtW's comment: just wait until you pay new dividend tax, then you'd feel totally shafted by an elephant...). We owe no debt to any third party, we’re profitable but the banks are only looking for people who tick the right boxes. It’s been frustrating and disheartening.”
Josh Turner, founder of Stand4 Socks, which helps charitable causes every time someone buys its colourful socks, was unable to secure a mortgage to buy property in Manchester. He was forced to buy with his father.
Source: British entrepreneurs locked out of home ownership after rules tightened
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