Some people have problems in verifying income as they are self employed, contract workers or rely on commission payments that are irregular in nature and as a consequence experience difficulty when it come to getting a mortgage.
It can be extremely tricky to get a mortgage if you are self employed. While there are nearly four million people self employed workers in the UK today, and thousands more who work on short-term contracts, traditional mortgage lenders still often see self employed borrowers as riskier than employed borrowers.
It is possible to get a mortgage from a lender on the high street - but if you cannot provide them with detailed records of audited accounts and tax returns for the last three years, you are likely to struggle.
In the boom years of the housing and mortgage markets, it became much easier for the self employed to secure a mortgage, either from a high street lender or from a specialist. Many offered self certification or self cert homeloans, where you literally stated your income as a self-employed borrower and they took your word for it and lent you a mortgage based on the income you claimed to have had over a certain period of time.
These days, those lenders who will consider giving mortgages to self employed people insist on three years' audited accounts. And even if you do have these records, you may find you can borrow far less than you expected. This is because a good accountant will have played down your profits in order to minimise your tax liability and so, when the mortgage lender assesses your income, it may look much lower than it actually is.
As a self employed borrower, it is more important than ever to seek advice. A specialist broker will know which lenders are likely to take you on and those which won't. They may also have access to some exclusive special mortgage deals for the self employed which you may not be able to get by going direct to a lender.
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