By 
The housing dreams of millions of self-employed people are being stopped in their tracks as banks undertake forensic analysis on their mortgage applications.
Self-employed workers are being asked to provide significantly more paperwork than before the pandemic and mortgage companies are taking weeks to deliberate on applications which would normally be waved through.
There are fears that this slowdown could cause house purchases to fall apart or sellers to shun self-employed home buyers in favour of those who are full-time workers.
In normal circumstances, banks ask self-employed applicants to provide two years of accounts, with a small proportion of cases being selected for further examination by staff, usually from applicants who are borrowing large sums or have unusual circumstances.
Now, mortgage providers are asking for multiple business bank statements and confirmation from accountants that their client’s business has not been impacted due to Covid-19. Rather than a handful of applications being taken aside for further scrutiny, some banks are now requiring that all applications are reviewed by a member of staff.
This process is called “manual underwriting” and can slow down loan applications, especially given that many banks are operating with reduced staffing levels.
Mark Harris of SPF Private Clients, a mortgage broker, said NatWest was one of the banks which was manually reviewing every self-employed case.
Simon Gammon of Knight Frank Finance, another broker, said some borrowers with straightforward applications were suffering delays.
“There is clearly a nervousness about the fact we might be about to see a lot of people lose their jobs and businesses go into a downturn,” he said.
“We have seen a change in the questions being asked and the level of information required by lenders is much greater. It means it takes longer for these mortgages to process.”
What banks consider acceptable income has also shifted since the start of the pandemic. Workers who receive bonuses or commission have found it increasingly difficult for this income to be accepted by banks.
Clydesdale Bank, Nationwide and TSB are among the mortgage lenders who will no longer allow customers to use bonuses as part of their mortgage application.
As previously reported by Telegraph Money, some banks are denying applications from business owners who have furloughed staff, even if their own personal finances have not been affected by the crisis.
Mr Harris added: “Not all lenders may look at applicants where grants and support loans have been taken out.”
Delays to the mortgage process can have major repercussions for borrowers. A study by polling firm Opinium and Butterfield Mortgages, a lender, found that 52pc of buyers had encountered problems with their property chain since lockdown began.
The research found that some buyers had been forced to pull out of purchases after offers had been accepted by sellers because mortgages that had been agreed in principle could not be completed.
In some cases this resulted in buyers losing a down payment they had made on the property.
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