Can I still afford a self employed mortgage if I’m a first-time buyer?
If
you are not a homeowner but are considering a self employed mortgage,
times are tough and you have to be ready for some hard work and
persistence. The UK housing market is stumbling and lenders are
uneasy about taking risks – so to get a self employed mortgage you
need to be as financially sound as possible.
Things
are not rosy for the potential UK first-time buyers: it was recently
revealed that at the start of 2008, only 14% of non-homeowners were
considering investing in their first property but by March just a
third of this group were planning to proceed with their purchase**.
This
means in the second quarter of 2008, two-thirds of first time buyers
had put their property search on hold. Why is this? Well, the credit
crunch has meant that lenders are much less keen on lending to
first-time buyers – especially first-time buyers looking to take
out a self
cert mortgage from a website.
Self employed means no fixed income, which means more risk for the
lender of the mortgage.
And
if there are options out there for first-time buyers, they are going
to be more expensive. Even when times were good for the self employed
mortgage market, a lender would need a higher down payment and would
tend towards a higher rate if they were to give someone a non status
loan. Now all mortgages, regardless of income status are demanding
higher rates and bigger loan to value amount. So a self employed
mortgage for a first-time buyer is not a cheap option anymore.
But
that doesn’t mean they are out of reach – many self employed
people would be able to comfortably manage to get onto the housing
ladder with a bit of planning, sensible forecasting and some good
advice. But the first step is to get all your finances in order -
self employed mortgage lenders will demand to see several years of
accounts and a clean credit history if they are going to be willing
to lend to you. So have everything at hand and have all other
financial responsibilities in order. Also, get online and check your
credit history – it is vital in the self employed mortgage lenders’
decision-making process, so be one step ahead before you start to
shop for your loan.
Things
are tight right now, self employed mortgage lenders are less keen to
lend - but they have not closed their doors completely. Talk to an
adviser and see what is still on offer for you if you are looking to
take out a self employed mortgage. It isn’t going to be cheap, but
going for a non status deal may be your only option – but with
their flexibility and numerous financial advantages a self employed
mortgage could actually be your best option.
**Abbey
survey, 4th
March 2008