| Until
the beginning of 2007 remortgages, mortgages and secured loans
were readily available to the self employed without any concrete
proof of income, and income proof, so called, was based purely
on a self certification of income by the applicant.
Many people
took advantage of the slack underwriting to obtain a bigger
home loan than they could afford.
Those
with their eye on a fancy new house would hike up their income
to obtain a large enough mortgage to purchase their dream
home.
These
self declarations of income really were purely self certifications
with the self employed simply stating their net profit on
a letter head or on a plain sheet of paper accompanied by
a busines card or similar, and no additional proof was required
in the form of bank statemements, an accountant's certificate
let alone full accounts.
It is
only natural to want an expensive house but unwise to over
state income to obtain a large mortgage300,000 self certifying
an income of £100,000 or more to obtain the mortgage,
when in reality the annual profit was well short of the £100,000
and was more in the region of £30,000.
It was
possible for employed people to declare their own income to
obtain homeowner loans from Future Mortgages.
Many self
employed are no lomger eligible for a remortgage or a secured
loan as they have no real proof of what they earn They also
unfortunately cannot get a mortgage to buy a home.
Sometimes
this is a bit unfair when people receive cash and cannot prove
their real earning power. This is often the case with hairdressers
and tradesmen such as carpenters, plumbers and decorators
who mainly carry out work for private individuals.
Self declarations
of net profit was similarly abolished for the self employed
requiring a secured loan, which is a loan available to homeowners
that can be used for almost any purpose, including debt consolidation.
There
is now good news for the self employed who find themselves
in this predicament, as one secured loan lender has re entered
the market and is offering secured loans to those who have
been self employed for a minimum of only six months.
Three
months bank statements are needed to prove that the applicant
is earning and really is self employed. The maximum LTV, that
is loan to value, is a maximum of 60% and the maximum secured
loan available on this plan is £30,000.
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