It Was Simpler For The Self Employed To Apply For Secured Loans, Mortgages And Remortgages.
July 19, 2010 by Kelly Jones
Filed under Debt Consolidation
It has always been very clear what information is required as regards earnings for employed people interested in taking out a secured loan, mortgage or remortgage. The wage proof required now, as it always has been, is three recent salary slips which must be consecutive, This is needed for all borrowers.
Granters of secured loans consider that 40% of the total earnings of the applicants must be sufficient to pay the monthly mortgage payment, the homeowner loan being arranged and any other debts remaining on credit cards, personal loans, etc.
However, there are loan providers who take up to half of the applicant earnings if they have good incomes.
The income calculation for remortgages and mortgages is different from that of secured loans, with lenders accepting three times the income, while others accept up to five times.
If an applicant earns 60,000, he could obtain a remortgage or a mortgage of anywhere from 180,000 up to 300,000, depending on the lender.
Due to the fact that there are strict rules regarding the amount of income considered for secured loans, mortgages and remortgages, an applicant may be declined if he does not earn enough.
Before the recession, this was never the case for the self employed who could declare their own earnings when applying for any of these financial products.
This was known as a self cert of income, and it meant that a self employed person could lie about their income to obtain a mortgage to buy the home that appealed to them. They were also always able to obtain a remortgage or a secured loan if they needed one to buy a car, take a holiday, etc. etc. They often used remortgages and secured loans as consolidation loans.
As such before the credit crisis, it was often easier for the self employed to obtain finance than it was for the employed.
Want to find out more about secured loans then visit Champion Finance’s site on how to choose the best remortgages for your needs.