What is a Self-Employed Mortgage?
John Mussi
Mortgage lenders preferred to see the regular income guaranteed by employment. However this has changed in recent years. There are now mortgage lenders who specialise in the self-employed market.
If you are self-employed or unable to prove your income, it can be difficult finding a suitable mortgage. There are a number of reasons why it is often more difficult for those in such situations, the main ones are that the income of the person tends to fluctuate, and they are unable to prove their income like those regularly employed who can produce payslips.
Self-employed people may experience 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 prove that 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 have no proof of income because you are self-employed and do not have three years worth of accounts it is unlikely that any high street mortgage lender will offer you a mortgage.
Being self-employed , and not having a regular or provable income needn't prevent you from getting the mortgage that you need, there are specialist lenders in the market who offer mortgages for these circumstances.
There are lenders that will offer you a mortgage on basis that you self certify your income, nevertheless, you'd still need to have a sizeable deposit to put down to lessen the lenders risk. For this deposit of 15-20% the lenders do not check employment records or ask for your accountant to clarify your earnings.
Mortgage lenders will want to see three years audited accounts from a certified accountant before they consider a mortgage for the self-employed. 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.
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.
Those with a reasonable amount of deposit but unable to show their true earnings would suit this type of mortgage.
You may freely reprint this article provided the author's biography remains intact:
About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.
The latest information and news on Mortgages:
Mortgage rates rise for first time in 12 weeks
Mortgage rates for 30-year US loans rose for the first time in 12 weeks as Americans sought refinancings amid record-low borrowing costs. United States - Mortgage - Loan - Financial Services - Business
Mortgage rates edge up; Housing market still slow
Record-low mortgage rates failed to pull the housing market out of its funk. Now rates are inching higher, but don't blame them if home sales stay sluggish.
Mortgage rates edged up a bit last week
Mortgage rates mostly edged up last week as investors' fears about the economy eased. Mortgage buyer Freddie Mac says the average rate for a 30-year fixed loan was 4.35 percent, up from 4.32 percent the week before. Applications to refinance home loans fell 3.1 percent last week, their first drop in...
Mortgage rates bounce back
Mortgage rates rose off last week's record lows, while borrowers remain locked in "pause mode."
Avg. mortgage rate up to 4.35 pct. off decades-low
Mortgage rates mostly edged up last week as investors' fears about the economy eased.
Yahoo! News Search Results for refinance
NABARD To Refinance About INR400 Billion Of Loans This Fiscal Year
NABARD To Refinance About INR400 Billion Of Loans This Fiscal Year
Do You Want To Refinance But Can't?
ATLANTA -- Do you want to refinance but you can't because you owe more on your house than it's worth? If you live in metro Atlanta and are willing to go on camera, please email Clark Howard's producer at patti.d@wsbtv.com.
Tata Steel to refinance $5.5-bn loans
Tata Steel is looking to refinance around $4.5-5.5 billion of its European loans. "We are looking at refinancing our European loans. We will refinance around $4.5-5.5 billion while the gross debt is around $9.5 billion," Tata Steel managing director HM Nerurkar said on the sidelines of a CII Metals ...
Refinance plan has its critics
The government will launch a refinance program this month that targets homeowners who are underwater on their mortgage but have not missed a monthly payment.
How To Refinance Your Home: A Personal Journey Part I
In which the writer matches wits with the home mortgage industry.