Non status mortgage solutions for self-employed borrowers
Mortgage lenders have traditionally been shy about lending to the self employed, contract workers and those working freelance. The concern most lenders share is being self-employed increases the likelihood of income not being regular or stable and therefore increases the risk of defaulting on repayments to them. In order to reassure them, you need to produce some other proof of your income. This is usually in the form of validation from a Certified or Chartered Accountant who will need to provide the accounts from your last three years' income.
Anyone not able to produce that information would be unlikely to meet the borrowing criteria of the usual high street lenders, which tend to use set methods of credit scoring to validate an application.
However, employment patterns are no longer as straightforward as they were even in the recent past. There are more self-employed people, many of whom will not have been working for three years, and more people working on short-term contracts. There are some lenders who will examine your particular circumstances as they tend to underwrite each loan individually, which means they can be more flexible in their approach.
Until recently some lenders also offered the opportunity for self-employed customers to self certify their own income on the application form. With a self cert mortgage (also known as non status), the borrower states their income without having to provide any proof. This was particularly useful where profits were understated in accordance with Generally Accepted Accounting Practice, for borrowers who have several income streams, such as from property rented out as well as regular employment which they want to use for the mortgage. However these products have now been withdrawn from the market.
Get expert advice
If you are self employed, it is worth seeking the advice of a mortgage expert. They can advise you on the products most suitable.
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