Power Up

Archive for May, 2010

For so many years, self employed individuals, freelancers, company directors and people whose earnings are just based on commissions and bonuses have found it very difficult to acquire finance for their homes on a mortgage or remortgage. This is mainly due to tax reasons.

Traditionally, a bank or a real estate mortgage lender will only lend the borrower an amount depending on his earnings. Since in most cases, self employed individuals earn much more than they can prove through tax returns and certified accounts, the borrowing amount for self employed individuals, freelancers, company directors and people on bonuses is limited to much lower than they can actually afford. Owners of small businesses may also have the same problem. Most small businesses do not keep certified accounts. Thus, they cannot provide a mortgage lender with the proof of earnings required in applying for a loan. New start up businesses may also face similar challenge as most mortgage lenders require at least two years of certified accounts. For this reason, new businesses that are running for a year or so will not be able to provide such requirements.

Fortunately these days, there are a few lenders who are willing to loan self employed, company directors, freelancers and employees on bonuses through a specialized mortgage product called self certification mortgage.