Remortages and Mortgages for the Self-employed

More and more in today’s society due to numerous reasons are people remortgaging their properties. Remortgaging is basically changing your mortgage without moving away from your home. You are basically switching your mortgage over to another mortgage lender, for whatever reason, whether it is a much better deal or you wish to do more improvements to your home. Remortgages are quite commonly used for releasing equity on your home today and using the funds to purchase a holiday home abroad.

When you remortgage you are basically terminating your old mortgage deal and changing to a new mortgage deal. Normally you would switch lenders, but quite often you can just be changing the mortgage deal with the same lender you are working with. If you remortgage with your current lender it generally involves changing your existing deal. Most lenders allow you to borrow between 25,000 – 500,000 in most currencies. As can be expected, all rates are variable and it always depends on your status and monthly income.

The change is not completely cost free and easy as there are redemption fees for changing provider, which need to be considered before going ahead with a remortgage, and these fees vary from lender to lender. As with anything in life it has its positive and negatives, and in this case the positives out weigh the negatives. Positives include lower and discounted interest rates and a monthly reduction to your monthly bills by up to 50%. The opportunity to scrap your existing mortgage and any other debts you may have. It can consolidate existing loans, into one easy and affordable monthly payment. Many remortgagers benefit by treating themselves to a new car, upgrade to their existing property or go away on a nice holiday.

Self-employed people normally have a harder time obtaining a mortgage. A self-employed person is described as someone who runs their own business and works for themselves without an employer. Even directors of small limited companies, will normally be classed as self employed when it comes to applying for any type of mortgage. It can be a big issue too many families as about 5% of the UK are self employed, and mortgage lenders are very strict with self employed workers. The main problem is that lenders require proof of income when assessing a mortgage or remortgage application. Employed people can use their pay slips and P60 as proof of salary, but there is no real equivalent if you are self-employed.

In place of pay slips, self-employed workers are normally required to provide audited accounts that profile their income over the last three years. These are not always a reflection on the workers actual income as accountants offset as many expenses as possible against tax, which is good for the self employed tax payer, but bad for the self-employed workers net profit, which is what the lender will base the size of mortgage they can offer. It is even harder for newly self employed workers as they do not have 3 years of accounts to show for.

For new self employed workers and even self employed workers who find it difficult to obtain mortgages with the average lender they need to be pointed in the direction of specialist lenders that deal with self certification, and look at each individual and assess their situation.

More information on Mortgages can be found at the author’s website at http://www.mortgages.vc

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