Self Employment on the Increase in Essex
If you are among Essex’s self employed entrepreneurs, you might think getting a mortgage could be a challenge. But all you need is the right assistance, so one of those new homes in Beaulieu Park could soon be yours!
The early 21st century will go down in history as the age of the entrepreneur. Self employment is on the up – across the UK the number of people self employed has risen by more than 45 percent since the turn of the millennium, from 3.3 million in 2001 to around 4.8 million today.
Essex, and in particular Chelmsford, is right at the heart of that shift. The city’s history of innovators means it is still a magnet for those wanting to tread their own path in business. It is unsurprising, then, that if you ask any mortgage broker in Chelmsford, you will be told they are receiving more enquiries than ever from self-employed entrepreneurs looking to take their first step on the local property ladder.
Can you get a mortgage when you are self employed?
We all know that lenders issue mortgage offers on the basis of your income, and so those in employment are required to provide payslips, an employment contract and so on to demonstrate what they earn. Of course, if you are self employed, you will not be able to do this – but that doesn’t mean you won’t be offered a mortgage.
In the heady days of easy credit back in the early 2000s, lenders offered what were called “self cert” mortgages. These were aimed at people in exactly this situation, and did not require you to prove your income. You simply “self certified,” telling the bank what you earned. These applications were fast tracked through with few checks.
If that sounds like a disaster waiting to happen, that’s because it was. The system was abused, applicants exaggerated their income and got themselves into difficulties, and the products were banned.
Proving your income
This leaves the self employed, contractors and freelancers in exactly the same position as everyone else – needing to demonstrate their earnings to the potential lender. Just because you don’t have payslips, you can still do this, but you’ll generally be asked to provide the following:
- A significant deposit
- Two years’ professionally prepared accounts
- A good track record of regular work
- A healthy credit score
If you are missing one or more of these ingredients, don’t panic. It doesn’t mean you won’t be able to get a mortgage, but it might mean you will have a more limited choice of providers, as your mortgage adviser will have to shortlist specialist lenders to meet your circumstances.
For example, there are some lenders who specialise in working with those who have a poor credit record. Others will still consider you for a mortgage even if you have less than two years accounts, provided you can demonstrate that the other factors are in order.
Are you a safe risk?
Ultimately, it is all about risk mitigation for the mortgage lender and giving them comfort that you will be able to make the repayments on your mortgage. Your mortgage advisor is in the best position to understand how to provide this level of comfort, and to help you buy your dream home in Chelmsford.