Self Employed Mortgages
If you are self employed, a contractor, have irregular income, earn income from bonus or commission payments or have multiple jobs, you're one of many people in the UK who know they can afford a mortgage, but will likely encounter difficulty getting a standard mortgage. Specialist self cert products have now disappeared from the market altogether, but that does not mean you are excluded from getting a mortgage as suitable alternatives may be available which are designed to meet your needs as a self employed borrower.
As a self employed borrower your choice of lender is limited but there are certain lenders more sympathetic and if your case stacks up and you have a good credit score, some lenders may be prepared to accept just one year of accounts, and take a projection from this. Many of the larger lenders adopt a 'computer says no' mentality, whereby if you fall marginally outside the required eligibility criteria, you're likely to get turned down, but smaller banks and building societies tend to take a more "human" approach. Knowing which lenders to approach is where a good broker can come into their own. It is their job to get all the information they can about you as a self employed borrower and your financial situation, and build a case as to why the lender should lend to you.
To get free no obligation advice from an independent mortgage broker who specialises in assisting self employed borrowers, simply complete our enquiry form.
The demise of self cert
At the start of the century, there was a proliferation of new mortgage products which were developed to meet the needs of a wide range of borrowers, some of whom may have formerly been excluded from the mortgage market altogether because they could not fulfil conventional criteria for verifying their income.
Self certification – or self cert – mortgages allowed borrowers to declare their own income, rather than providing documentary proof for the lender. There was no requirement to produce payslips or audited accounts to prove income. These types of loans were helpful to people in a variety of circumstances, but unfortunately the products were abused and encouraged many to exaggerate their income.
Changing lifestyles helped drive the growth of self certification mortgages. The number of people who are self employed has grown and, among those who are employed, working patterns have become more flexible, with more people on short-term contracts or earning incomes that vary significantly from one period to another.
The self employed and freelancers may be regarded as pariahs by some lenders, but some banks and building societies have built up more experience dealing with borrowers who work for themselves, and are more willing to lend to such individuals on standard terms.
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