With the news that the Financial Services Authority (FSA) plans to ban self-certification mortgages, many of those who’ve recently set up their own business may be concerned about their mortgage prospects. And those with a deal nearing its end will be wondering about remortgaging in today’s climate.

The proposed restrictions are something of a last gasp for the FSA, which is to be abolished within 18 months. The stress is on lenders verifying information presented to them, and making sure the sums add up – which means that borrowers will not only need the right income but also be able to prove it. To a great extent, this reflects what lenders are already doing: they’ve been far more cautious in their approach since the credit crunch. But lenders are in business to lend – and that means they want to attract as many creditworthy customers as possible.

A self-employed person will need to provide two, or in many cases three, years’ signed-off accounts or tax statements from H M Revenue and Customs to show their income. Some lenders may also want a clear indication of future business and earnings. Those with large incomes seeking bigger loans, typically over half a million pounds, will come under particular scrutiny – but ownership of assets such as savings or investments will be taken into account. Contractors with a consistent record of work will attract some lenders.

Keeping your paper work in reasonable order and at the ready for your application is an obvious starting point. Accountants legitimately look for all legal means of keeping your tax bill low by minimizing stated profits – it’s worth discussing this area with them, as higher profits could boost your mortgage prospects.

A crucial point to remember is that lenders vary in their approach – which is where a knowledgeable broker, such as Go Remortgage, comes in. Lenders confirm that they are already planning new products to fit in with FSA guidelines and suit self-employed borrowers. Your broker can also discuss options for remortgaging or secured loans as a way of supporting your business.

Tags: Economy, Housing Market, Markets

This entry was posted on Sunday, July 18th, 2010 at 1:44 pm and is filed under Current Market News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.