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Self Employed Mortgages

The employment landscape in Britain has altered dramatically in the last 20 years and the current culture would be almost unrecognisable to previous generations. People change companies and careers on a regular basis now, making the concept of a job for life practically redundant. The number of people working for themselves has also risen and figures from the Office of National Statistics show that at the end of 2007, 7.3 million people in the UK either worked part time or were self employed.

But while changing attitudes to employment afford the individual more flexibility and choice, there are some potential difficulties for self-employed people and proving your income can be one such problem. Luckily, as the ranks of the self-employed have swelled, so too have the number of mortgage options for such workers  as a result, not having a clearly defined income needn’t be a barrier to homeownership.

  • Helping hands
  • Get your house in order
  • Pros and cons of mortgages for the self employed

Helping hands

If you are self employed and looking for a homeloan, it may be wise to seek some assistance. A mortgage broker will be able to ascertain what type of mortgage will be most suitable for your circumstances and can access products that aren’t available on the high street. If you work for yourself, you may need to enlist the services of an accountant to not only ensure that all your finances are in order, but to verify your claims when you apply for a mortgage.

Get your house in order

When applying for a mortgage as a self-employed worker, you will probably need to provide audited accounts as well as bank statements, so make sure you keep the relevant information filed away. For some mortgages such as self-certification, you may not need to prove your exact income, but you will need to provide some evidence to support your claims.
Pros and cons of mortgages for the self employed

Pros

1. Self-employed mortgages are likely to be more flexible and take irregular earnings into account
2. You may not have to prove exactly how much you earn
3. The amount you borrow is based on your real earnings rather than the figure quoted to the taxman.

 

Cons

1. You won’t have as much choice as your employed counterparts
2. The rate of interest is likely to be higher than mortgages available to standard borrowers
3. The best deals may only be available through mortgage brokers and you will have to pay for their help.

 

The overall cost for comparison is 7.5%. The actual rate available will depend on your circumstances. Please ask for a personalised illustration.
Rate correct as of 17/03/2009.
 
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