With the demise of the self cert market we get a lot of calls from recently self employed clients that are looking to find out what type of mortgages are available in the current market place.
There are at least 3 lenders who operate in this market place as long as one has a reasonable deposit of at least 20 %, a clean credit history and proof of income over a 12 month trading period such as accounts or self assessment tax returns – SA302’s. The lenders that our brokers would generally consider are Principality Building Society, Leeds Building Society and a recently new entrant Kent Reliance Building Society.
12 months self employed with Principality
Principality will offer mortgages with at least a 25% deposit with competitive interest rates. If you have only been self employed for a minimum of 12 months as a Limited Company this lender will look at your PAYE earnings and dividends. If you run your business as a sole trader then the lender will look at Net Profit.
12 months self employed with Leeds Building Society
Leeds building society will consider providing you with a self employed mortgage once you have been trading for a minimum period of eighteen months and will go as high as an 80% mortgage. They will require an accountant’s projection to ensure the business; its profits and your income look sustainable. In the past few months their product range has not been as competitive as Principality but they have different unique selling point such as a lower deposit requirement – 20% rather than 25%. They look at the same provable income as Principality with PAYE and Dividends if you operate as a Limited company and Net Profit if you are a sole trader.
New Entrant – Kent Reliance Building Society
Kent Reliance has announced its intention to offer mortgages to the recently self employed with deals up to 80%. The mortgage deals will initially be available by certain mortgage brokers but in time it is expected that more mortgage brokers or packagers will have access to the deals. Kent reliance rates are usually slightly higher than that of Principality but again they will offer mortgage deals with a lesser deposit which will attract a certain segment of the market and their product range will reflect this niche segment of the market. It has been reported that these mortgage deals will come with a 2% lender arrangement fee which is on the high side so you would expect Leeds to take the lion’s share of the business if you are self employed with only a 20 % deposit and assuming you have been self employed for 18 months, otherwise your only option would be Kent Reliance.
Clive Ringrose, Sales Manager at The Mortgage Broker (St Neots) Limited commented “it’s good to get another lender in this segment of the market as it gives our clients a greater choice of deals to fit their personal circumstances. Since the withdrawal of lenders from the self cert market we have numerous enquiries from the general public concerned whether mortgage deals are still available to them and we advise them that if they have provable income, have been trading a reasonable period of time, and a reasonable deposit then there are options available to them”