Self-employed mortgages

Self employed mortgages can be more difficult to obtain or more expensive than mortgages for those people with salaried work and regular pay slips as many self-employed people have erratic, irregular or widely fluctuating incomes.

The more evidence you have to prove that you are a good bet for the lender - such as more than two or three years of certified accounts, a good credit rating, and being able to demonstrate that you have kept up with mortgage, credit card and loan payments without problems in the past - the more chance you have for a self employed mortgage at preferential rates.

The lower a risk you are seen to be to a lender, the greater chance you will have of obtaining the mortgage you require. Therefore, the bigger the deposit you can pay on the property, or if it is a remortgage, the greater the equity available in your home, the better the deals will be that are offered.

In recent years many new mortgage products were introduced including a wide range of self-certification mortgages, offered on the basis of the applicant stating their likely income rather than proving their past income with documentary evidence. These became very popular with self-employed people seeking a mortgage. However, the range of mortgages available to the self-employed - as with the mortgage market as a whole - has been severely restricted following the economic downturn and therefore it is advisable to thoroughly research all current options available.

Initially it is a good idea to use a self employed mortgage calculator, many of which are online, to get an idea of what kinds of mortgages are available to you.

It is advisable to then obtain at least three quotes, which you could get from your bank or building society (which will have restricted choice as it offers only its own products), an appointed representative (who represents certain lenders) or an independent mortgage broker authorised to offer mortgage products from the whole of the market.

Often mortgages for self employed are more widely obtainable from mortgage brokers as mortgages offered by high street banks and building societies are generally geared to people with a regular salary.

By Ben West