Self-Employed Mortgages With Bad Credit
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Getting a Self-Employed Mortgage If I have Bad Credit
It’s true that, as a self-employed individual with bad credit on your files, you will encounter quite a few more obstacles in your path to getting a mortgage than if you had been in conventional employment with a healthy credit history. But, with determination, a pragmatic approach and help from an experienced adviser possessing an in-depth knowledge of both the mortgages market and lenders’ processes, you should be able to achieve the home loan you need.
Being self-employed, you will be used to keeping accurate records, understanding your cash flow, agreeing contracts, drawing up forecasts or projections, and managing how you get paid. Depending on the level of your business, you will also be working with an accountant to document your revenue and outgoings, make your earnings tax-efficient and submit certified accounts to HMRC. This means you will already have much of the proof of your income and assets that you need to show a mortgage lender.Read More
With your bad credit, the first step is to acknowledge the issues and to determine exactly what, if anything, you can do about them immediately before we identify which lenders and products will be a good fit for your circumstances. With mainstream lenders largely closed to you, the most suitable options will lie within the specialist lending sector. It’s a matter of knowing who to speak to in order to get the result you want.
A professional mortgage adviser will go over all these things with you ahead of approaching any lenders or making an application. As unlimited mortgage brokers with access to lenders from the whole spectrum of the UK market, we are familiar with all their criteria for accepting applicants and the assessments lenders conduct to check a borrower’s creditworthiness. We’ll take the stress out of the process and ensure you’re in safe hands.
Information on Self-Employed with Bad Credit
How do I obtain a Self-Employed Mortgage with Bad Credit?
Convincing a mortgage lender that you have a stable, secure income, proving you can meet their affordability criteria and showing them that you are a responsible borrower can be a real challenge at the best of times when you’re self-employed. If you need to do this with poor credit to your name and adverse items on your credit history, then the task can seem extremely challenging and could indeed put off many would-be borrowers from going through all the effort.
However, the process to getting a self-employed mortgage with poor credit need not be as stressful as you imagine. You may have already found out to your cost that well-known mainstream providers tend to shy away from lending to people in your position, and that to get the mortgage you need you’ll have to apply to one of the many specialist lenders in the market who are geared up to provide mortgages to those with unconventional income streams and items of bad credit.
As these specialist lenders do not deal directly with the public, to access their products you’ll need to enlist the services of an established unlimited mortgage broker. This will be an important step to ensuring your application runs smoothly, as they will be able to run through your whole circumstances to understand where problems lie, advise you on how best to work around or solve your issues, and then identify exactly which lender and product will be best suited to your situation.
Which lenders you should contact and the terms you will be offered will depend on the exact details of your poor credit, and the amount of time that has passed since they occurred. If they were three or more years ago, then the impact could be fairly mild, but lenders will be unlikely to offer a mortgage if they took place within the last 6–12 months. However, whether you’ve been subject to a CCJ, IVA, bankruptcy or simply a string of late or missed payments, we are confident there will be a lender and a mortgage out there for you and will help you through every stage of the application process.
Poor Credit Mortgage rates for the Self-Employed
Lenders base all their lending decisions and mortgage deals on the perceived level of risk involved with lending to any particular applicant. The higher the perceived risk, the higher the interest rate will generally be. People who are self-employed usually have to go the extra mile or two to prove they have a stable income and will be a reliable borrower; if you also have a poor credit record, then your task will be even more difficult and if a lender grants you a mortgage it’s likely you will have to accept a higher interest rate than usual.
While this might sound like too big an obstacle for many self-employed applicants, it’s worth bearing in mind that other factors will also affect their decision on interest rates. Lenders may also take into account how long ago the adverse credit event occurred, any mitigating circumstances, what you have done in the meantime to rebuild your credit profile and the amount of equity or assets under your control.
Mortgage interest rates are constantly fluctuating in general, as the economy and the market shifts, and are never easy to predict, and it would be impossible to provide a list of ‘best rates’ here, or give a real indication of what you should expect. It’s also worth bearing in mind that the mortgages market is highly dynamic, with new lenders and products frequently entering the specialist adverse credit and self-employed sectors. In this competitive environment, with a number of companies all vying for your business, rates may well become more favourable in future.
To help yourself access the more attractive rates, you should ensure that your application is as thorough as possible, containing every possible piece of information that could paint your finances in the best possible light, making a lender’s decision easier. You’ll need to show three years’ worth of full, certified accounts detailing your regular income, evidence of forthcoming and ongoing work at reasonable rates and a clean recent credit history since any adverse events took place. Lenders are more concerned with your current financial position than that of the past.
To find out more about what mortgage rates could be available to you as a self-employed applicant with poor credit, get in touch with a member of our team to arrange a free appointment.
Self-Employed Mortgage Lenders with Bad Credit
Lending to self-employed individuals who also have one or more various items of bad credit on their files might seem like quite a specialised area of lending, and it is. You’ll have probably discovered that mainstream lenders operate within very strict criteria, and anyone falling outside what they define as their ideal, low-maintenance client is usually turned away quite quickly. Having an unconventional income can be enough to make a high street lender’s computer algorithm sound the alarms, but if you also have adverse credit to your name, then the shutters will come down.
This risk-averse approach from the high street lenders has its roots in the credit crunch of 2008, when many lenders lost a lot of money, leading to tighter regulations on lending and greater care over who they lend to. This meant that a significant minority of people were effectively shut out of the mortgage market, with nowhere to go to obtain a home loan. In response to this, several new, smaller lenders entered the market to capitalise on this new demand for specialist lending to people in atypical circumstances, providing mortgages to people who had experienced financial problems in the past.
Specialist lenders can adopt whatever criteria they choose and will take a far more open-minded approach to the circumstances around your application than banks and high street providers. They tend to place far more weight on your current financial status than that in the past, will allow for the time that has passed since your bad credit issues and will also accept your predicted income as a self-employed person if you show satisfactory documentation. They’ll pay attention to how your credit profile and borrowing habits have improved since any adverse credit events as well as how your business has grown in recent years.
You should bear in mind that, while smaller as companies, these specialist lenders still have to operate under the same rules and regulations as their mainstream competitors, and your mortgage, money and home will be no less secure than with a more familiar provider. They also do not advertise publicly or consider applications directly from potential borrowers, so you will need to work with an experienced mortgage broker to access their products. This is actually a great benefit to your mortgage ambitions, as the lender will know you have been already vetted by the broker, your application will be put together perfectly and you will know that their product will be the best fit for your circumstances.
Self-Employed Mortgage Advice with Bad Credit
Finding the right mortgage lender to suit your unique circumstances, whatever your financial position, is a vital piece of the jigsaw as a homeowner. When you are self-employed, your task can become more complicated as you need to provide proof of your current and ongoing income to show you will be a reliable lending prospect, and your choice of lenders and products will be slightly reduced. If your credit records also carry adverse items resulting from problems with money in the past, then identifying the right lender and convincing them of your reliability can be very challenging.
This is where professional advice, guidance and, in some cases, direct help can be invaluable in your quest to secure a mortgage and purchase your next dream home. At The Mortgage Centres, we have a wealth of experience in both the bad credit and self-employed sectors. We understand all the issues you might face as well as all the criteria your application might have to meet in order to be successful. Once we have taken a good look at your situation and your aims for the mortgage, we will be able to identify exactly which lender will be the most suitable to approach and what steps you might need to take next to ensure everything goes smoothly.
It’s important in these specialist cases to take time to examine the past credit issues as well as your anticipated business prospects so we can make an accurate assessment of your chances ahead of an official application. We’ll then be able to search the market for the product that most closely matches your needs, at the most favourable rate available at that time, and present you with our recommendations as to the next steps. When the time comes to make the application, we can guide you through the process and make sure that you complete it in such a way that it makes it as easy as possible for the lender to make a decision in your favour.
You should be completely open with your broker and not hold back any information, even if you feel embarrassed or awkward. Doing so will only make our job more difficult and could result in you being offered an unsuitable product, a less-favourable deal or even having an offer withdrawn if new information comes to light that you had not previously revealed.
Trying to manage all this by yourself will sadly not result in the same kind of outcomes or number of options available to you, despite the amount of time and effort you will likely spend conducting online research. As unlimited mortgage brokers with access to approximately 12,000 products through over 90 lenders – many of which are not available to the public online or on the high street – we are confident that we will find a lender and mortgage product that will meet your requirements and enable you to continue along the happy path of home ownership.
To find out exactly what your options will be in your unique case as a self-employed person with bad credit, get in touch with our office today to arrange an initial consultation. It’s free, comes with no obligation whatsoever and will provide you with everything you need to know to take the next steps.