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Self-employed refused mortgages after receiving SEISS grants: ‘Treated like a bankrupt’

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The pandemic has hit self-employed people very hard as many saw big decreases in trading. On top of this, millions have been excluded from the Self-Employment Income Support Scheme (SEISS) due to strict rules on the “newly self-employed”. Last month, the BBC reported that many self-employed people have now been rejected for mortgages after receiving grants from the Government.

Mortgage brokers said those working in sectors like entertainment, hospitality and travel are the worst affected, and a number of lenders spoken said they are not accepting mortgage applications from people on furlough.

Brokers added that banks often see people who have received coronavirus-related grants as high risk.

Hospitality worker Lisa Harding told the BBC: “I almost feel like I am being treated like a bankrupt, in some way, that I am being penalised for something that wasn’t my fault.

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“I feel unfairly penalised. Furlough has been brilliant in that it has protected my job

“But I didn’t expect to come out of the other side – with a deposit, no debt, a perfect credit rating, all of the things that should make me an ideal first time buyer – only to find out that banks just will not lend to me at all.”

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Freelance theatre designer Daniel Ellis was also shocked to find he was not eligible for a mortgage having received a SEISS grant.

He said: “The mortgage system needs to change to reflect evidence of successful recurring rent payments, and we also feel it’s wrong that the self-employed are scrutinised more than the employed.”

READ MORE: Self-employed workers may be eligible for tax returns – are you?

They urge people to get mortgage advice, use an accountant to make sure the numbers stack up and make sure your papers (such as tax returns) are in order.

On top of this, you should ensure your credit score is up to the mark and save for a bigger deposit to strengthen your chances.

Currently, you can claim the fifth self-employment grant (SEISS 5) if you think that your business profit will have been impacted between May 1, 2021 and September 30, 2021.

HMRC will have contacted you if you are eligible.

To be eligible, you have to have submitted your 2019 to 2020 tax return on or before 2 March 2021, have profits of less than £50,000 and your profits must be at least equal to your non-trading income.

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