The number of self employed people in the UK is growing. According to the Office National Statistics (Q4 2006) there are a 3.8 million people that fall into the category of working for themselves. One reason for this growth is that work patterns are changing with more people than ever deciding to work from home.
This change in work patterns prompted mortgage lenders to develop a new product specifically targeted at the self employed who otherwise may not be able to meet the criteria of a standard residential product. They were quick to realize that these people would find it more difficult prove their income in the traditional way.
Working for themselves meant they would be unlikely to be able to produce pay slips and that their income would not follow the standard regular monthly payments of an employed person. Not wishing to miss out on this growing category of home buyers the self employed mortgage scheme was born.
So how do you determine if you may be a candidate for a self employed mortgage? Here are a few examples to help you decide whether this type of mortgage is the best option for financing your home purchase.
Obviously, this type of mortgage is primarily designed for someone who works for themselves on a full time basis. For example, if you are running your own shop or driving your own taxi, then you will probably need this type of mortgage as you may find it difficult to prove your income. After all, if your accountant is good at his job he will be doing all he can to legally minimize the amount of profit you have to declare in order for you to save on the tax you would otherwise have to pay.
What if you are not Full Time Self Employed?
Not all people work for themselves full time. Some people work on evenings and weekends, doing additional jobs as delivering leaflets, providing bouncy castles for children's parties, fixing cars or a whole host of other part time activities to bolster their income. These people are classed as part time self employed and if they want to use the income from this to qualify for a mortgage, they will probably need a self employed mortgage to do it.
But what if I am Employed and Have Irregular Income?
Finally, there are also people who are in the normal sense employed, but may still need a self employed mortgage. These are people who earn from dividends (such as major company shareholders), from commission (such as sales people) or from bonuses (such as workers in the City). While these people are not self employed, their income is irregular, which is one of the key criteria for qualifying for a self employed mortgage. If you are unable to show a regular income this type of mortgage is your best choice for funding a house purchase.
In all the above cases, in order to get a self employed mortgage, you will have to make a declaration of earnings (saying how much you expect to earn in the coming months and years) and you may have to get a statement showing previous income from your accountant. Once you have that information, it is quite straightforward to get a self employed mortgage.
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Frequently Asked Questions
My house is foreclouse..... in couple of weeks ...
By: Jenny Lee | 24-07-2008
my house is foreclouse..... in couple of weeks........ We owe 20,000 for the past due payment........ I have 10,000 + I am hoping I still have hope to save my home.... what do you say????
Do i remorg. Or take out the qu. Credit.
By: Brenda | 24-07-2008
Brendashould i remorg. Or take out a equitly loan. Comps in our area go for about 195,000.00 we owe 78,000.00 we need to pay off credit cards of 12,000.00 and buy a car, my husbands 1984 ford pu is on its last leg. We plan on staying here another 2 years than move to florida.We had it up for sell,but everyone came in at $140,000.00 a deal for them a great lost for us had we acceppted.When you apply for a eq. Loan do they ask where all the money is going? I would like to purchase a cheap fixer-upper in florida for cash. What do you think ? The only money we have is in the eq. Of our home. Our home was appraised at 210,000.00 . What i am trying to do is pay the credit cards,buy another pu. For my husband,and buy cheap fixer-upper in florida. Thank-you
Miss 1 payment
By: kevin | 24-07-2008
i havem't missed a mortgage payment ever but i got the flu n my company is moving i know i'm going to miss this payment what should i do...
PMI : what does it really represent and what does it cover for homeowners?
By: Napadeb | 24-07-2008
David: Why do mortgage companies continue to charge PMI when the equity accumulated in the home is higher than 20% of the balanced mortgage amount? PMI really appears to be a fraudulent charge to homeowners. We have high equity and have not borrowed against it but still cannot get the mortgage company (GMAC) to take off the monthly PMI charge. If people's homes are going into foreclosure why doesn't the PMI insurance cover the loss, since the owner is forced to pay PMI seems reasonable that this PMI charge should cover that loss. Otherwise what is the purpose of PMI at all? Please answer all questions as we feel that PMI attached to mortgage loans is a shady and questionable charge. Thank you.
Refi or not to refi
By: robert | 24-07-2008
mortgage 6%(290K) Appraised value 500K. 2nd 7.5%(28K) total combined 330,000. bills= credit cards 15K-two cars-17K-Misc 3K. should I refinance and combine so I can deduct the interest, lower payments and start socking away for retirement or stick it out? Payments total (New mortgage)2800.PITI against 4200. currently. Thank you, RMJ
Should I file for bankruptcy?
By: djarac123 | 24-07-2008
I tried to refinance my house a few months back. All was going well then when I house was appraised I was upside down. They wanted me to come to the table with $8880.64. Of course I didn't have that money. I spoke with my mortgage company to help but they didn't do anything. I never missed a payment at this point. I have since moved out of my home and into an apartment. The house will be foreclosed. I have an 80/20 loan.
I am struggling right now. I am living paycheck to paycheck and can barely keep a float. I pay my car loan, personal loan, car insurance and ect... I am so stressed out. I have two kids and I don't know how I am going to buy school clothes and so forth. I am borrowing money to buy food. Now I am scared that my Second Mortgage is going to come after me for the money I owe $28000 when my house goes into forclosure. Do I need to file for bankruptcy to prevent that or what will happen? Please help. My credit score was 660 now its 518 and still going down. What to do?
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