1st Mortgage Brokers

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The self employed are by their nature entrepreneurs who have the drive and ability to convert an idea into reality. They are to some extent in control of their destiny and may stand to profit markedly from the fruits of their business.

Statistically though the odds are against them, most new businesses fail within the first two years of trading. This fact has caused many mortgage lenders to take a cautious view of the self employed, often imposing a minimum period of trading. Traditionally the self employed would have to produce 3 sets of accounts before a mortgage application could be considered.

Although technically an employee, a company director will often be treated as self employed if their shareholding exceeds 20% or thereabouts. Directors with a shareholding less than 20% can apply for a mortgage immediately. Please complete our fact find.

Since 1979, self employment in the UK has risen from 7.4% to 13.3%. Mortgage lenders have recognised this growing market, and their is now a number of lenders competing with each other for market share. This competition has forced lenders to review their lending criteria such that it is now possible to achieve a mortgage with a 10% deposit after just 6 months of trading.

A further problem is that the self employed business person will understandably try to reduce their taxable income perhaps by reducing their drawings and taking a larger dividend income. Mortgage lenders will only take into account taxable income, some will not consider dividend income.

Mortgage lenders have answered this need by introducing self certification mortgages. Self certification requires that you make a declaration as to what is your income, but you do not need to provide proof, most lenders require that you employ an accountant who may have to confirm the viability of the business. Many of the self certification mortgage lenders only accept business through authorised mortgage brokers such as ourselves.

A recent development of the self certification mortgage is the flexible self certification mortgage. this mortgage is well suited to the self employed who prefer the greater level of control this allows. By making regular additional monthly payments or lump sum payments, borrowers can significantly reduce the term of their mortgage and save money. Other key facilities are underpayment and payment holidays. The opportunity to overpay when business is good and borrow back if the need arises.

Self certification mortgages are available with a minimum 15% deposit, for those who have been trading just 1 year.

Mortgage loans based on an income multiple (normally 3 to 4x's) of taxable income are available with 5% deposit if 2 years accounts are available

To find the best deal for your situation, please phone us or complete our fact find with your requirements.