Self employed mortgage

  • You are self employed and need a mortgage. Long gone are the days when a Mortgage Broker or Lender could offer the self employed a self certificated mortgage. This would have required you to provide little or no proof of income and allowed you to get a mortgage or loan with ease.

    They were originally designed to help the self employed, whose income was often complex and tax efficient, to get a loan for their remortgage or house purchase.  However due to the abuse of the product in the years before the credit crunch, they were withdrawn very quickly and are currently no longer available. What options are there for the self employed today?

    Today, although it is not impossible for someone who is self employed, or runs their own business, to secure a mortgage, it can certainly be a difficult and frustrating process. Lenders are far less willing to agree to lend to those they see as a risk with a ‘non-standard’ income.

    Despite having the savings and income needed to pay a deposit, and often with a solid track record of keeping up repayments, you may well be refused a mortgage simply because your income does not fall into a ‘standard’ bracket.

    Many Accountants make the problem worse by making the self employed persons income seem lower through the efficient and legal process of tax planning.

    Don’t give up though. It is still very much possible to get a mortgage, but it is more important than ever that you seek the proper advice from a professional with the experience of obtaining mortgages for the self employed.

    If you know you are going to be needing a loan in the near future there are many things you can do to improve your chances of being accepted.

    • Make sure your credit file is accurate and up to date.
    • Are your accounts up to date.
    • Speaking with your Accountant in advance may mean your books can more accurately reflect the profit of your business.  Too much retained profit can sometime restrict the maximum you could borrow.
    • Making contact to with a good Mortgage Broker will give you advance warning of what criteria you are going to be asked to meet.
    • Don’t change your company type just before applying.  Going from sole trader or partnership to a limited company could put you back a long period of time.

    It is certainly getting easier for the self employed to obtain finance but we are still a long way from the flexibility being shown before the financial crisis.