Before the advent of the credit crisis self employed borrowers had no trouble obtaining remortgages, secured homeowner loans or mortgages, but in the course of the past three years this all changed, and those in the position of being self employed were left high and dry and in the situation of having great difficuly in being granted either a secured loan, a mortgage or a remortgage.
Until the start of the credit crunch those who were self employed often enjoyed the position of being able to get a mortgage, remortgage or a secured loan easier than could their employed counter part.
Why this was the case was due to the fact that when applying for either homeowner loans or a mortgage the provider always considers whether the prospective borrower can comfortably afford the repayment of the debt.
Homeowner loan providers use generally the income calculation of 40% of gross earnings to cover the monthly payment to the mortgage existing on the property, the payment for the secured loan being taken out, and any debt not being repaid by the proceeds of the loan.
Often, however, there is no need to consider the other debts as many people apply for secured loans to arrange debt consolidation which means that all debt is cleared and only the homeowner loan remains.
Sometimes employed applicants were declined due to shortage of income.
There was never any problem with tee self employed being refused a secured loan due to lack of enough income, as they only needed to self declare their own salary on their business note paper and no additional proof was asked for.
Many over stated their income and then, as a result found themselves struggling with the repayments.
Self certs., as they were known went out with the credit crunch and those needing a remortgage or a mortgage must have an accountants certificate or accounts.
This is unfortunate for those who cannot prove their income because of such reasons as receiving cash in hand.
There is still however one homeowner loan provider who still considers applications on self declarations of net profit but the maximum loan on this plan is about 23,000. It is never the less an opportunity for self employed with no proof of income to obtain a secured loan.
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