For a very long time the self employed have been discriminated against in terms of consideration for mortgages and re-mortgages. The times are slowly changing as more people become self employed, work as consultants, online freelancers or as commission paid only. Lender have has to tend to the self employed remortgage market, if only for the reason that it is a virtually untapped market for them and they are losing out on money big time.
Breaking down these old barriers we see traditional lending institutions and mortgage brokers taking a more serious look at this market place. But don’t worry it is not only normal middle class people who find it difficult to prove their income who have suffered. Many groups of self employed people have this problem, from company directors to fruit sellers on the street corner.
It is necessary to be able to provide proof of income and expenditure in order to obtain a mortgage or re-mortgage. Many self employed people are remiss about keeping accounts and these need to be provided to the lender, going back two years. In the case of a start-up business this is obviously impossible. There is also another problem, self employed people also tend to minimize their income for tax purposes and this works against them when applying for a mortgage loan. It’s a little like what you gain on the roundabouts, you lose on the swings.
The self-certification mortgage or re-mortgage is the product to look for if you are in any of the above mentioned groups and are struggling to find a lender to finance your needs. In the case of a self certification mortgage the lender requests proof or yearly income and trusts that the borrower has disclosed all the facts truthfully.
As this is a much higher risk loan, there are going to be a whole load of conditions attached to it that may make it more expensive and chances are, a high down payment will be required. These loans are generally granted at 85% of the value of the property and the buyer has to come up with the additional 15% as a deposit or down payments. This is a very high down payment!
Fortunately as lender realize that self employed people are actually able to pay their mortgages or re-mortgages and they are receiving return on their investments, they have started offering self certified mortgages with better terms. At this point in time, the best terms you could hope for would be a 90 – 95% mortgage, meaning you would have to fund the additional amount of 5 – 10% from your own pocket.
With regard to a self certification mortgage loan, the best thing to do is search for the best terms you can get and search online. Mortgage brokers and lenders both advertise online, they have sites with built in interest calculators and all kinds of tools that can help the self employed remortgage seeker find what they are looking for at a price they can afford.
And do remember that if you are self employed and your income fluctuates, you mortgage needs to be something you can easily afford, no matter the circumstances and this remains true for a self employed remortgage too.