It is at present confusing for the self employed to fully understand exactly where they stand when needing a mortgage, remortgage or a secured loan.
In the past, the self employed were almost at an advantage compared to employed people when making am application for a remortgage, mortgage or a secured loan, as they could self declare their own income, unlike employed applicants for these home loan products.
While the employed had to be truthful about their earnings, as they had to provide wage slips when applying for these loans, the self employed simply had to provide what is widely known as a self cert.
This meant that no self employed applicant would ever be declined for a mortgage, secured loan or remortgage, at least not on the grounds of having insufficient income, that is unless he or she was rather dim witted.
There was even one lender at that time, namely Future Mortgages, who even accepted self certs from employed secured loan borrowers.
The only check that they made for these self cert employed applicants, was to telephone the company where they were employed to ask if the applicant did in fact work there, and that it was not pure fabrication.
They did not even bother to enquire how much the person earned, and as a result, there were cleaners earning as much as doctors almost.
It was of course very tempting for people to increase what they earned, to obtain the mortgage they wanted to buy the home of their dreams.
The same thing happened when applying for a remortgage or a secured loan that they could use to release equity on their property to use for almost any purpose, including making use of remortgages and secured loans as debt consolidation loans.
In the course of the recession, the accepting of self certs, when making application for any mortgage product stopped 100%, and the self employed then needed, as they do to this day, either full accounts or an accountant's certificate to prove their true earnings.
The secured loan lender, Nemo, who had at one point accepted self certs for homeowner loans at up to 100% LTV, ceased granting loans to the self employed.
Secured loans have always continued to be available from one lender on a self cert basis at 50% LTV, and high interest rates apply.
Matters are now looking up some what for the self employed, with Nemo now advancing loans at 75% for the self employed, although an accountant's reference or accounts are needed.
Link Loans has a plan at 75% LTV also for those who own their own business, but they require the same income proof as they do for Nemo Loans.
For those only recently se;lf employed, the Link Loan plan for homeowners without accounts comes in very useful. The equity however is limited to 60%. They must also provide three months bank statements to show the income that their business is providing.
Therefore, although we are no where near the slack hay day of self employed loans, things are at least moving in the right direction.
However, accounts or an accountant's certificate are still required when applying for mortgages and remortgages.