Mortgages for the Self Employed have been sparse over the last few years. Despite providing a huge part of the economy, lenders have been reluctant to lend to this area. However, lenders have now recognised this and are looking more positively to assist the 4.5m self employed (figures as at end of 2014). A few lenders will now even offer mortgages to those with just one years accounts (up to 85% of the property value), although, in the main, the normal requirement is to have two years audited accounts. In all instances the lender will need to prove suitable affordability and a deposit will be required, but this is a huge step forward from just a few months ago.
There are also lenders lending in this arena that will cater for customers who may have a missed mortgage payment in the last 12 months or may have Defaults and/or County Court Judgements (CCJs). Terms and conditions apply, and lenders must prove ‘responsible lending’, but where there is demand, there will always be supply.
The other area that continues to be on the increase and something of a headache for lenders is ‘lending in to retirement’. As we all know, life doesn’t end at age 65-70 and neither should it on the high street! Often, retired people have managed their finances successfully over the years and enter retirement mortgage free. At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend. Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working. There are schemes where equity can be turned into a mortgage (not equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents. This is not right for everyone but it is certainly worth talking to a qualified advisor to review all possibilities.