Self Employed Mortgages

If an individual is Self-Employed they could find that obtaining a Mortgage is a lot harder than if they were an employee of a company. When a borrower applies for a Mortgage, the mortgage lender will need to ensure that they are able to keep up with their loan repayments. If they were an they would more than likely be guaranteed a monthly wage, whereas if they are Self-Employed there would be the risk that their income may fluctuate. This could affect their ability to repay their mortgage loan on their Self Employed Mortgage.

A lot of mortgage lenders are now offering these Self-Employed Mortgages. Aswell as this a huge number of mortgage brokers will have access to them.

Obtaining a self employed mortgage is far from easy. There is a lot more paperwork to complete and the borrower could actually find that a lot of mortgage lenders will not offer them their best deals. In spite of this things are now improving, and if the borrower looks around the mortgage market, they could still obtain a good offer on their mortgage without having to pay a lot of money.

With a self employed person, the taxman is always on their back, their cash flow is a continuous headache and obtaining a self employed mortgage may also be hard to do. As their income is not very predictable, a mortgage lender is not often willing to give them a 100% mortgage loan or even a 95% mortgage loan. They will need to complete a lot of paperwork in order to convince the mortgage lender that they are a good payer and are worthwhile of a mortgage.

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It is very hard, but nowadays things are slowly improving. A lot of the big name mortgage lenders now actually include these self employed mortgages within their mortgage portfolio, and the increase in competition makes it easier for the borrower to browse through the mortgage market and they may even be able to obtain a 95% mortgage or even a 100% mortgage without having to pay a lot of money for it. Paperwork can still be a problem, though. Normally a mortgage lender will want to see self employed borrowers’ accounts for about the last 3 years as well as their business bank statements. A general problem for a self employed person is that their accounts could well understate their real financial position. Mortgage lenders try to assess each individual on the amount of profit that they are actually getting from their business. This is normally quite understated by the person’s accountant. The problem with this is that although it means the borrower will pay less tax, it will actually reduce the amount of a mortgage loan that the self employed individual could borrow.

If the self employed individual does not have an accountant, then they will need to supply copies of their last 3 tax returns.

If the borrower is unable to supply the mortgage lender with 3 years worth of accounts then they could still be able to obtain a Self Employed Mortgage. In order for an individual to apply for one of these mortgages they will need to show their your income and will need to get a certificate from their accountant. They could also need to supply the mortgage lender with the last couple of years worth of their Mortgage statements or alternatively they can supply other forms of documentation that will show that they have been receving a relatively stable income or that shows that they are a reliable payer.

This application is known as a Self Certification Mortgage and is offered by many subsidiaries of the major mortgage lenders within the UK. This Self certification will require the individual to declare their income amount, but they will not need to supply any proof.

Nowadays in the UK, there are thousands of self-employed individuals. Because of this mortgage lenders are now starting to see the need to supply Self Employed Mortgages, which are suitable for every individual circumstance.

Mortgage lenders now realise that the Self-Employed Mortgage clients could require a loan which is flexible and will let them over pay on their mortgage payments or even under pay on them in order to coincide with their monthly income. Because of this, these forms of flexible Mortgage loans are now even more available to the self-employed mortgage searcher.