Obtaining a Bad Credit Mortgage if you are self-employed
Applying for a mortgage even if you are a conventional salaried employee can be a nerve-wracking experience. If you are self-employed, then the process can require another level of bureaucracy, as you need to supply the necessary documentation for the lender to make their assessment of your income and affordability. If you are further hampered by adverse credit of any sort, then the task could seem impossible, and you may sadly be turned down for a mortgage by more than one lender.
The news is that all is not lost. There are indeed mortgages available for self-employed people with items of bad credit on their reports, you just need to know who to approach, and what they will be looking for in an applicant. Even though mainstream high street lenders will shy away from dealing with people in your position, there is a whole sector of the mortgage market that is not accessible to the general public, with smaller lending companies who are willing to extend home loans to people with instances of bad credit, even if they are self-employed.
These mortgages are geared up to meet the borrower’s individual needs, and will come with criteria that look beyond the usual credit rating scores. Often, these mortgages are underwritten manually, rather than being dictated by a computer algorithm, with lenders taking into consideration all relevant factors. Depending on your circumstances, this could be projected business accounts, dividend income, confirmed contracts and retained profits as well as the nature of your bad credit, the length of time since it occurred and how you have managed your borrowing in the interim. If it’s been two or three years since the adverse credit event, then lenders are often flexible, but if you’ve had bad credit within the last six months, then we have to say it’s unlikely you will be offered a deal.
The downside is that you might have to endure a slightly higher interest rate to reflect the element of added risk, but with markets constantly shifting and remaining very competitive, it should be that you’ll still find a deal that is easily affordable.