Remortgages UK - for your self employed mortgage needs

Self Employed Mortgages

In order for an individual to buy their own property they will need to purchase a mortgage loan. This is quite a simple process for the majority of lenders. However in more recent years more and more individuals have decided to become self employed.

When applying for a mortgage if an individual is self employed then there is a slightly different process they need to follow in order to obtain this loan.

Over the years a self employed person, contract worker and employees that are paid on a bonus scheme and commission only basis have found it hard to obtain a mortgage.

They have either been declined a mortgage or if they have managed to obtain a mortgage they have been charged higher rates of interest. This is solely due to the fact that the mortgage lenders have thought them to be of a high risk. Nowadays, mortgage lenders have seen that the number of self employed individuals has increased considerably and have therefore decided that it would be in their best interest to offer these individuals a mortgage.

In order for a self employed individual to purchase a mortgage, they will need to supply two or three years worth of their accounts information. If they do not then it may become difficult to obtain the mortgage as the mortgage lenders normally become suspicious it they cannot show their earnings by means of a pay slip or company accounts.

An option that is available to the self employed individual is that they could use a mortgage broker when looking for their mortgage. The advantage of this is that it could potentially save the borrower money as well as time. A specialist for self employed mortgages will have a lot of knowledge on which lenders will offer self employed mortgages and of course those that will not. They will also have access to a variety of exclusive offers which are not available on the high street.

A self employed person cannot rely on a guaranteed income/salary, P60 or a payslip to prove their income. Therefore an alternative that the self employed borrower could do is to apply for a Self Certification mortgage. This is basically a mortgage that is offered on the basis of the presumed income of the individual instead of the borrower needing to provide any documentary evidence.

A basic mortgage would normally offer a loan of up to 95% of the property value. A Self-certification self employed mortgage however will always need a higher deposit amount. The normal loan amount offered with these mortgages would be about 75% of the property value.

Self certification mortgages are now supported by a great number of mortgage lenders. Nowadays the interest rates are a lot more better for the borrowers whether they are ficed rates, variable rates, capped rates, tracker or stepped tracker rates. There are also specialist and exclusive schemes available.

Some Mortgage lenders will even offer a Self Certificate mortgage to self employed individuals for up to 90% of the loan value as well as loans of up to the sum of £1 million.

A few lenders will also offer these mortgages without obtaining a status check on the borrower. This means that the borrowers income nor their mortgage history will be checked although a credit reference check may still be looked into. Although this offer looks good to the borrower it can however, affect the terms and conditions and overall pricing of the mortgage offered. The majority of lenders will show the increase of risk for these non status mortgages by decreasing the loan value amount to roughly 85% of the property value. Although in some cases it is possible to obtain one of these mortgages with a loan value of 90% of the property value.

A self certification self employed mortgage is also suited to temporary workers, contract workers and employees who earn high amounts of commission.

Another option for a self employed borrower is to consider applying for a flexible mortgage. With these mortgages, the borrower is able to increase and decrease their mortgage repayments in relation to their earning capacity. For example a builder may have a large amount of work within the summer months and very little, if any in the winter months. These mortgages would allow him to reduce his mortgage payments in the winter period and make overpayments in the summer period.