4 tips on mortgages for the self employed
1. Getting a Mortgage with a low credit score
Understandably, banks and building societies are careful who they lend money to and financial histories are always looked into, with no exceptions.
Looking into a credit history will show up any defaulted payments and give the lender a good impression of how financially responsible you are with your spending. As well as looking at your credit report, lenders will also look at any County Court Judgements (CCJs) or bankruptcy proceedings that may be against your name.
If any of these apply to you, then you may find it harder to be accepted for a mortgage, however, there are certain lenders who will still lend to you.
2. What’s my credit score like?
It’s always best to see your own credit score; this way you can better understand if and why there might be a reason for a refusal of your mortgage application. You can request to see your own credit rating from companies like Experian, Equifax and CallCredit. Remember there are some really simple ways you can help improve your credit score by being a little more vigilant, such as registering on the electoral roll.
3. Mortgages with low credit ratings
If you do have a poor credit score, it’s more likely that the interest rate on your mortgage could be higher, in order to compensate the risk that the lender is taking. In this case it may help if you have a larger deposit to put down upfront in order to potentially reduce your monthly repayments.
4. Other options available
Help to Buy Shared Ownership
If you can find as little as 5% of the purchase share upfront for a deposit, then you can buy a share of the property (between 25% and 75% of the market value). You pay monthly rent on the remaining portion and can increase your ownership share as and when you can afford to do so.
The Bank of Mum and Dad
If you have a family member who owns a home and is willing to help you out, they can be named on your mortgage as a guarantor, and either:
Their home is used as security – your mortgage company would reclaim money from your guarantor, or repossess their home if you failed to meet the repayments on your mortgage.
Or use their savings as security – your guarantor will put a lump sum into a savings account with the lender. This money will be unattainable until you have paid off a certain amount of money on your mortgage.
Lee Wright of Mortgage advice bureau in Crewe wrote this. Please call him on
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