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Mortgage Tips & Advise

Determining relevant self-employed income and lending criteria

House Sprouting Roots and LeavesMortgage Strategy published a thought-provoking article last month. Its premise suggests that self-employed borrowers get a raw deal with mortgage lenders.

Harsh, you might say. But I agree with the content…to a point.

The majority of self-employed workers do still struggle to prove their mortgage affordability.

The problem is often that they try to get approved at their local or a High Street branch. But a generic advisor doesn’t understand (or can’t use) income listed as a net profit.

If the system’s broke, get a broker to fix it

So, what’s the answer? Do you forfeit the ability to buy your own home if you work for yourself?

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Self-employed mortgage lenders

Self-employed mortgages have become harder to secure since the credit crunch. That’s no surprise; advisers see most non-PAYE applicants as higher risk. But there are self employed friendly lenders: lenders sympathetic to independents.

But how do you know who the best self-employed mortgage lenders are?

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High St mortgage lending: the bane of limited company contractors

In recent years, there’s been a revolution in the way we work in the UK. Individuals’ mindsets have changed, challenging the 9-5. Independent professionals are incorporating their own companies. They’re building a unique brand of expertise in their field.

And how the economic recovery needed these entrepreneurs. It was this rise in self-employment that supported all UK labour market figures.

Many independent professionals striking out on their own did so on a contract-to-contract basis. To streamline their businesses, most used limited company payment structures.

Why go to all that trouble?

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You can get a self-employed mortgage with just one year’s accounts

There are two ways you can apply for a mortgage when you have your first year of trading under your belt. A fast, savvy way or the slow and painful approach.

The fastest way for self-employed people is to speak to a specialist mortgage broker. Not just any broker, but one who knows what they’re doing. And that’s key, here.

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How to evidence self-employed income to get competitive mortgages

Securing mortgage finance on the High Street is far from straightforward for the self-employed. The one trait lenders share is treating self-employed accounts in their own unique way.

An oxymoron that may be (as well as a real pain), but it’s nevertheless the truth. One lender may insist on seeing three years’ accounts. Another may just want to see one year’s records, whilst the next can ask to see your contract.

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Two fatal mortgage judgement calls almost all contractors make

Mortgage LendersMany contractors still find it hard to secure mortgages from High Street lenders. There are two classic reasons, both revolving around education:

  • 1. they go direct to lenders they know, most of whom don’t have bespoke contractor mortgage policies;
  • 2. branch/call centre staff at these institutions don’t understand how contractors and freelancers work.

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Are mortgages for contractors easier than for self-employed?

It’s no secret. If you’re self-employed and don’t work PAYE, you struggle with High Street mortgage lenders. But some lenders have thrown freelancers and contractors a mortgage lifeline. It’s based on their contract rate and extends beyond typical IT-based check-boxes. And, believe it or not, it even bypasses ill-educated branch staff.

Advisors in branch may even have told you that you only qualify for a self-employed mortgage. But mortgages for contractors don’t rely on payslips and accounts, as they’d have you believe.

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Mortgages for self-employed contractors just got a lot easier

ANY professional contractor can now apply for a mortgage based on their daily contract rate* through The Halifax.

Before this strategic move by the UK’s largest lender, only contractors working in the IT sector would be entertained. Now, Halifax has lowered the barrier to entry by offering freelancers mortgages in any niche based on their contract rate.

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Self employed mortgages are not beyond your reach

We’ve all been there. Our decision to go self-employed seems to be justified. Business is booming. With it, the freedom we sought is within our grasp. But there’s still one niggle: rent!

Private rent can be the most frustrating aspect of contracting. Knowing that we’ve earned it by our own means, us contractors develop an uncommon affinity with our cash.

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Self-employed mortgage arrangement fees rise

Not renewed your self-employed mortgage in a while? You may be in for a surprise – the nasty sort – when the time comes. Lenders arrangement fees have risen. We think we know why…

In 2009, the average a lender would charge for the privilege of processing your mortgage application was less than £1,200. In the short time since, that amount now stands at £1,500+, a rise of more than 25%.

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