Self-Employed Mortgages

In today’s economic climate, lenders are usually more than happy to
offer mortgages to customers. Banks are competing with each other to
build a customer base, with the result that customers can shop around
to find a great deal on a mortgage. However, even though getting a
mortgage is easier than ever, selfemployed people may still have
difficulty finding a lender willing to take a risk on their ability to pay
back a major loan. This is because people who are employed can
easily prove their income to the bank or Mortgage Company, while
self-employed or contract employees may have difficulty showing a
steady, reliable income.

This does not mean that self-employed people cannot get mortgages.
As stated earlier, lenders are always looking for new customers, and
they are not about to ignore the more than three million potential
customers in the UK who are self employed. Many lenders offer
self-employed mortgages, which are similar to regular mortgages except
that they require more documentation to verify your income.
A selfemployed mortgage may also require you to provide a large down
payment of up to 25 percent of the price of your home.
Still, there are many advantages to a self-employed mortgage. Before
you apply for this type of mortgage, you should ensure that you have
your accountant prepare three years of audited account records. The
lender will look at these to determine your net income in the past three
years. You can also provide documentation such as mortgage or loan
payment histories that show you have been a reliable borrower over
an amount of time. By preparing well ahead of time, you can increase
your chances of receiving a self-employed mortgage.

Once you have all the documentation you will need, shop around for the
best mortgage product. Many lenders are offering features that help
self-employed people cope with a mortgage, such as the ability to
overpay when you make extra money or underpay when your cash
flow slows down. You should also look for a self-employed mortgage
that does not have onerous penalties for paying down your principal
early or re-mortgaging. Additionally, if you are planning to overpay
at times, it is important to look for a mortgage that calculates interest
daily, so that you pay less interest.
While you may be used to dealing with larger banks and mainstream
lenders for your business and personal banking, when you are looking
for a self-employed mortgage, you should not be afraid to expand your
search. Some smaller mortgage companies and lenders offer specialised
mortgage products for self-employed people, and these companies are
often your best choice for a self-employed mortgage.