A self employed remortgage can be a serious hassle to obtain. The self employed, whether it’s a carpenter, plumber, freelance writer or one of the many other self employed professions, will normally be the ones who get a horrible deal when it comes to remortgaging. These people normally will have to pay awful rates just as they would if they had a bad credit rating, even if these self employed individuals did not have any history of financial woes.
The issue that the self employed run into is a tax issue. A self employed person will typically minimize their income, so that when tax time comes and they have to report their earnings they can save on taxes. They tend to earn more income than they can actually prove with their tax returns or through any of their other accounts. The reason an individual not being able to prove earnings is an issue is because lenders tend to only lend up to three and a half times an individuals annual salary. This lowers the amount a lender will lend a self employed individual drastically.
Good news for the self employed though is that there is a specialized type of mortgage or remortgage available, and that is a “self certification mortgage” or more commonly referred to as a “self cert mortgage.” When a self employed individual applies for this self certified mortgage the application, or the application interviewer will just simply ask the individual how much they earn. The key in this is that they will trust what you say, you won’t have to prove your earning like you would with a normal self employed remortgage.
There is one issue however with an individual getting a self cert loan, and that is that these types of loans are considered to be higher risk loans. So the lender offsets this with demanding a higher down payment. They do this with percentage, the percentage is a number that they are saying they will give you but you have to cover the difference upfront. Typically around 85 percent but some lenders are offering self certs around 90 and even 95 percent. What this means, is if an individual is looking to get a loan on a house for 100,000 dollars, and the percentage is 85 percent, then the individual would have to pay 15,000 dollars upfront to be able to be qualified to get the loan.
A self employed remortgage can feel like walking through a mine field at first, but once you figure out what you are doing and where you are going, things will start to get better for you. The self certified remortgage is something that every self employed individual is grateful for, even us freelance writers.
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