Articles & News About Mortgage Loans

How To Get a Mortgage If Youre Self-Employed

If you are self-employed, work on a contract basis, or have an income that is irregular or comes from multiple sources, it will generally be harder for you to get a mortgage than it is for someone who is an employee and can easily prove their income.

A self-employed person is someone who runs their own business and works for themselves without an employer. Directors of small limited companies, although technically employed on a PAYE basis, will generally be classed as self employed when it comes to applying for a mortgage or remortgage.

With over three million self-employed individuals in the UK, the attitude of many mortgage lenders towards the self-employed population is a problem that can affect a large number of people, even though many self-employed people often earn more than a lot of salaried workers.

The problem stems from the fact that the majority of mainstream mortgage lenders require proof of income when assessing a mortgage or remortgage application. Employed people can use their payslips and P60 as proof of salary, but there is no such straightforward equivalent if you are self-employed.

In place of payslips, self-employed workers may be asked to provide audited accounts that show their income over the last three years. However, in many cases, these accounts will not give an accurate reflection of how much money a self-employed person is making. This is because if the accountant who prepared the accounts is doing his job properly, he will have offset as many allowable expenses as possible against tax. This has the effect of reducing the self-employed person's net profit, upon which the lender will base the size of mortgage or remortgage they are prepared to offer.

The situation is even worse for the newly self-employed, as they may not yet have been trading long enough to have had three years' worth of accounts prepared.

This is where mortgage lenders who specialise in self-certification mortgages and self-employed mortgages come into their own. These types of lenders appreciate the different and complex working patterns of the self-employed, contract workers, and people whose jobs are seasonal. They are prepared to look at each case individually and assess each mortgage application on its own merits, rather than just applying a series of one-size-fits-all income tests. In many cases, self-certification means that you do not need to supply any proof of income - you just declare what your income is without having to provide any supporting documentation.

In addition, specialist self-employed and self-certification lenders are more likely to offer flexible mortgage products that allow overpayments and underpayments. This is ideal for people whose income can fluctuate throughout the year, as it means you can overpay when times are good and underpay if you're business is going through a quiet period.

-----

Copyright 2004 David Miles. You are welcome to reproduce this article on your website, so long as it is published "as is" (unedited) and with the author's bio paragraph (resource box) and copyright information included. In addition, all links to external websites must be left in place.

David Miles is the editor of a number of mortgage websites including UK Mortgages & Remortgages where you can find further advice on mortgages or request a personalised mortgage quote or illustration.

Other Article Sites

findabook.com moneycd.info a-mortgage.info about-lemon-laws.info aboutstudentloans.info
all-about-publishing.info auctions-articles.info bestcollege-university.com bestispconnection.com
biblefolder.com blogger-website.com books-used.info brokers-guide.info buywindows.info cable-dsl.info
career-miner.com carpel-tunnel.info cashinaflash.info cashloanreviews.info casinobell.com chat-house.info
clearmycredit.info collegeloantips.info crones.info depression-articles.info dirnic.net dishguides.info
divers-below.com expodog.info financewizz.com fire-insurance.info getgood.info handleit.net it-idea.info
health-supplies.info hosting-right.com insidealert.com insurance-facts.info jobs-employment.info
justgood.info lookgold.net lowcost-travel.info money-source.info myhostzone.info numisblog.com
peoplesearchfinder.info pr-articles.info realeas.com refinancing-guides.info spyware-remove.info
telelot.info the-law.info toppaid.info travel-deals.info travelcorrect.com wedding-guide-site.com
your-blog.info your-credit.info

MORE ARTICLES:

Mortgage Lenders And Specialist Lending
Fierce competition amongst mortgage lenders in recent years has brought about great news for the consumer - The Banks & Building Societies scrapping for business has only resulted in a greater depth of choice and value, for nearly every type of borrower, from those looking to obtain a mortgage for the first time through to those looking to remortgage their existing one.

NAMP Views HUD's Recent Announcement on DPAs as Opportunity for Mortgage Professionals & Homebuyers
HUD has issued a new rule to block the loophole which allowed for down payment assistant programs to provide charitable gifts toward homebuyer's down payment requirements. The impact will touch low- to moderate-income homebuyers, the majority who are first time, who would have relied on a charitable organization to meet the requirements for an FHA loan and down payment on a home. The National Association of Mortgage processors (NAMP) views HUD's recent announcement on DPAs as opportunity for mortgage professionals & homebuyers to utilize other approved alternatives to these programs such as community seconds and SELP programs.

Locally-Owned Destiny Lending Partners with Academy Mortgage; Firm's New Relationship Brings More Mortgage Options to Clients
Destiny Lending, which had grown to be the second largest independent mortgage firm in Northern Colorado, has partnered with nationally-known Academy Mortgage Corporation. Destiny founder Shawn Beard said the merger with Academy will allow Destiny, with eight loan officers and three support staff, to offer in-house underwriting and closing, as well as a wider variety of mortgage products. This will allow Destiny to provide fast, top-quality service to the real estate and home building industry, as well as homeowners.

Interest Only Home Equity Loans Featuring a Fixed Second Mortgage Rate from BD Nationwide
BD Nationwide Mortgage introduces an affordable only home equity loan that features an interest only payment option with a fixed rate. This second mortgage allows borrowers to get a fixed mortgage rate while also benefitting from a reduced payment and increased cash flow. Homeowners have the luxury of converting their home equity line of credit into a fixed rate second mortgage while keeping the interest only option. BD Nationwide has released several new second mortgage products in 2006 that have offered additional "cash out" opportunities for homeowners without requiring them to refinance their existing first mortgage.

Mortgage Leads, Looking for Quality
If you are a loan officer or mortgage broker that has used mortgage lead companies in the past, there is a very good chance that you have encountered some bad experiences.

Saving A Fortune With Your Mortgage
Life is full of choices.

Examining Home Mortgage Refinancing Options a Summer Priority For Canadians
Canadians looking at their home mortgage refinancing options should note a sea change in emphasis in the Bank of Canada?s policy focus that is affecting, and will in all likelihood continue to affect, Canadian mortgage markets Well, perhaps not a sea change, but there has been a decided shift in emphasis amongst Canada?s central bankers from spurring the economy through the use of rate cuts, back to keeping a wary eye on inflation

The Mortgage Lead Company That Works for You
For mortgage brokers and loan officers looking for a mortgage lead company to work with, be sure to take the time to research the mortgage lead company to be sure it is a good fit for you.

What Mortgage Options Are Available To A Homebuyer?
Buying a home is something that most people look forward to. When it comes time to look at the various options that are available for mortgages, though, the questions start to arise. There are so many different options that it can definitely be confusing. Here are some brief descriptions that explain your different loan type products.

The realities of Private Mortgage Insurance or PMI
Private Mortgage Insurance or PMI is defined as the insurance policy paid by the homebuyer when the amount of their primary mortgage is greater than 80% of the value of the property. Reading the definition again, take into account the words ?primary mortgage? this is because its not the total of all the mortgage expenses and home loans, rather it is the Private Mortgage Insurance is the amount of the largest mortgage on the property. To calculate Private Mortgage Insurance, take 0.5% of your primary loan balance and divide it to 12. As per example if your primary mortgage is $200,000 then you?ll be paying $83.34 per month. More often than not, but this amount is already considered as burden to most home owners. Though it can be a burden, i...

Should You Refinance Home Mortgage Interest Rates?
Why refinance? There are a number of reasons people refinance the loan on their homes. For some, it's a way to take advantage of lower interest rates. For others, it's a means for building equity on their homes faster. For a few, it's a way to tap into the equity they have accumulated in their homes.

The Benefits of a Fixed Rate Mortgage
A vital question that faces most homeowners at some stage is whether or not to opt for a fixed rate or variable mortgage. The age-old weighing up of security over potential savings is one that has plagued buyers for decades, and one to which there is no definitive right or wrong answer. Both variable and fixed rate mortgages have advantages and disadvantages, but with the right financial advice it should be easy to understand which type of mortgage relates to your situation and can provide you with the best chance of financial freedom in years to come.

How To Calculate Mortgage Payments For Beginner
Living in an apartment is good idea while you are still single Once you reached a mature age where you need to settle down and start a new family, you are unable to continue living in the apartment

Demystifying the Mortgage haze
Mortgage loans are ideal for individuals purchasing a home of their own. They are generally offered against some collateral. But home buyers are often overwhelmed by the number of mortgage deals available and they tend to get confused and opt for a mortgage loan that appears convenient but in reality it might not be the best deal for them.

Home Equity Loans Based On A 2nd Mortgage
If you are looking to take advantage of the money accrued in your home, 2nd mortgage home equity loans are worth looking into. You can use the equity in your home to do some home improvements, take a vacation, or pay off some of your other debts. Getting a 2nd mortgage home equity loan can be a great way to get a little extra breathing space financially, and take advantage of your most valuable asset.