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employed secured loan applicants used to be able to obtain finance
more readily than employed people.
Self employed
loans, as long as they were secured loans, were easier to
obtainn than employed loans were as self employed loans were
never going to be refused on the grounds that the profit was
too small.
All secured
loan lenders accept a different minimum income.
In the
past Blemain, for example, asked for a minimum income of £10,000
which could by no stretch of the imagination be considered
high.
Paragon,
the Solihull based secured loans lender, before they ceased
granting new homeowner loans at the start of the recession,
required a minimum household income of £15,000. They
also had the requirement that one of the applicants earn at
least £13,500.
This could
rule out people who had £upwards of 15,000 family income
and if someone earned14,000 and the other say £13,000
was not enough.
This made
little sense, as the scenario of £27,000 is £12,000
in excess of the minimum income required but neverthless it
did not fit their criteria.
After
this initial requisite, secured loan lenders in general accepted
40% of gross income to cover certain financial outgoings which
in the case of homeowner loans was the mortgage payment, the
loan being arranged and any unconsolidated credit on loans,
credit cards, hire purchase, etc.
It was
not unusual for employed people to be refused a loan as they
did not earn enough.
The declined
applicant could often have afforded the secured loan repayments
as they had a smaller mortgage than the accepted applicant
had.
At the
same time an applicant, meeting the minimum income needed
to borrow, could obtain a secured loan although more over
commited financially that the declined applicant.
It was
seldom a situation that self employed were turned down for
secured loans due to shortgage of net profit as they simply
stated their own net profit.
Self certs.
was excellent for the self employed unable to really provide
total proof on their profit wh who did not have an accountant.
Although
often useful, some self employed abused the self cert. system.
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