FISCUS MORTGAGES - INFORMATION AND ADVICE

Traditionally the Self-Employed, and also Company Directors, have found it very difficult to find mortgage lenders who are willing to take a flexible view in relation to an applicant’s income. Without three years audited accounts, showing healthy profits, borrowers have in the past needed to approach specialist lenders to obtain a mortgage and have usually had to pay through the nose to obtain funds.

Whilst a good accountant will endeavour to minimise the taxable income of a self employed individual, in order to reduce the amount of Income Tax payable, this can lead to difficulties when trying to prove to a lender that a greater income is actually being earned. For Company Directors the picture can appear to be very confused, because their income may be made up of different elements, including salary, dividends and an element of the company’s profits.

SELF-CERTIFICATION MORTGAGES

With all this in mind a number of mainstream lenders will now consider self-certification of an applicant’s income, where they are Self-Employed or Company Directors. This means that a self-employed applicant can state their income level on an application form and the lender will not carry out any further checks. This leniency on the part of the lenders allows them to operate a more streamlined service and helps to keep their administration costs down. It also allows the borrower to state their total income rather than the figure which is finally presented to the Inland Revenue for taxation purposes. Another important advantage of this type of lending is that it is not necessary to have been trading for three years in order to have an application considered.

Most lenders in this market-place still offer self-certification mortgages at higher rates than their normal mortgage range, due to the increased risk they are taking. In recent times, however, a number of lenders have bucked this trend and offer a range of standard discounted, tracker and fixed rate mortgages using the self-certification system.

The opening up of mortgage lending in this way to the Self-Employed and Company Directors, offers those who traditionally have had difficulty in obtaining a mortgage an important lifeline, enabling them to obtain affordable mortgage funding. We recommend that you take a look at our daily updated self-employed mortgage tables, which allow you to compare the best interest rates available on UK mortgages for the self-employed.

If you are interested in a self-certification mortgage and would like to speak to an Independent Financial Adviser (IFA) to discuss your mortgage requirements, please complete our quick mortgage enquiry form and we will have an IFA contact you within 24 hours.