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How do lenders look at self employed borrowers?

Posted on 7 December 2012 by Louise Carpenter


How do lenders look at self employed borrowers?

My partner and I are both self employed. His business is doing well as he is on a long term fixed contract and earns over £60k net . My busineses are showing losses due to the economic climate but I earn approx £16k net. We have a property recently valued at about £250k and a mortgage of £139k . We accrued large credit card bills due to buying stock for my business about £44k and I operate with overdrafts on my business that allow me to have up to £45k . We would like to release the equity in our house to pay off the credit card debt. Would this be an option available to us being self employed?

Louise,

The self employed element shouldn't stop you from getting a mortgage, though lenders do have a wide and wonderful range of different ways that they assess self employed borrowers and calculate their income. Consolidation of unsecured debt is another issue that lenders have a diverse approach to, as many are concerned by borrowers using their equity in this way. 

The positive news is that from the sounds of your initial enquiry your partners income is sufficiently strong enough to base the loan on his figures alone, and I would be confident that we can assist you, however we would need to know more information, before we can give you a more definite answer on this.

As John Charcol is an Independent, Whole of Market broker we also deal with those lenders who still manually underwrite cases, which means that they can judge each cases purely on its merits.

If you would like to discuss your enquiry in more detail, then please let me know and I'll arrange for you to speak to one of our consultants.

Regards,

Simon

simon.collins@johncharcol.co.uk

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Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

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