Mortgages
for the Self Employed - Mortgage Information
What
is a Self-Employed Mortgage?
There
are millions of self-employed people in the United Kingdom and many
of these people may have a problem finding a mortgage. Those in
standard full-time employment are basically guaranteed to be paid,
and can get references from their employer as well as be able to
show their payslips therefore proving their income. Mortgage lenders
like this as it cuts down their risks.
If
you are self-employed or working on a short-term contract, you could
be financially solvent, and able to keep up payments easily, but
that doesn't make it easy for you to provethat you will keep up
payments to your mortgage lender. They want to know that that you
will be able to keep up payments for a full term, usually 25 years,
not just over the next year. If you are on a short-term contract,
you are not guaranteed to get another contract, and should you be
self-employed you have to chase payments that are due to you and
are working on contracts as well.
Mortgage
lenders will want to see three years audited accounts from a certified
accountant before they consider a mortgage for the self-employed.
Even if you have this, your accountant may have helped you avoid
tax by understating your profits for the past few years, and this
could come back to haunt you. If you do not have three years accounts
you may be able to get a self-certification mortgage by declaring
your income. You have to provide a certificate from your accountant
for your last few years mortgage statements etc, and you are still
not guaranteed a mortgage.
Some
specialist mortgage lenders have targeted the self-employment mortgage
market by providing some solutions that offer a more flexible approach
to match the working pattern of someone who is self-employed. This
means that they accept that when you are self-employed you may enjoy
periods of high income but you may also suffer from periods of low
income. Your mortgage should reflect that, enabling you to overpay
and underpay when you need.
Mortgage
lenders actually used to be more flexible, they offered self-certification
loans and non-status loans where your financial status wasn't confirmed
by an employer. But they rarely do this now, and their lending criteria
has been tightened up. You will need to show an upturn income every
year and probably business plans for the future. You will also need
to provide a large deposit as you are likely to be lent only up
to 75% of the value of your home.
You
should look out for the specialist mortgage lenders who don't penalise
you for your lack of status, trust your accountant, and might offer
you up to 95% of the value of your home.
List
of Major Mortgage Lenders
OCIS
provide general financial information, we urge you to consult an
Independent
Financial Adviser ( IFA )
before making any important decisions about your finances. |
