MSE News: Mortgage blow for the recently self-employed

FraudBuster

The FSA press release can be found here:

FSA moves to make sure all borrowers with a new mortgage can afford it

FSA/PN/118/2010
13 July 2010
The Financial Services Authority (FSA) has today outlined proposals to ensure all mortgages are carefully assessed to make sure borrowers can afford them.

Continued:

http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/118.shtml

foreversummer

It will be a very great shame if we go back to the days when it was difficult to get and mortgage if you were self-employed, and if you did you paid a higher rate as you were automatically assumed a higher risk. I can remember when high street lenders were not interested in the self-employed and you had to go to specialist lenders, ie The Mortgage Business is one I particularly remember - terrible rates.

Should you decide to buy a house for the first time if you have recently become self-employed? Probably best to wait a while to see how your business pans out. But consider someone who is a homeowner who becomes self-employed and now needs to move house or remortgage. Excellent credit rating, responsible borrower, good budgeter, good income from self-employment, adaptable person, adaptable partner able and willing to do extra hours in own employment to boost income. There are so many factors to take into account but just to say no because you have not been trading for three years is ridiculous.

I look at it this way, whose the best bet to lend to. Someone whose been in secure employment (say public sector) for years and has never done anything else, or someone who has the drive and determination to go out there and work for him/herself.

To tar the self-employed as risky is just not fair.

Foreversummer

Conrad

It's incredibly short sighted regulation by middle class ernest white women who have no contact with ordinary working class people, otherwise they would realise how many nmillions of people will now be excluded from buying a home.

They also forget than far less than 1% get repossessed, so for the sake of avoiding some repossessions, millions are barred from home ownership.

Real world examples-

The agency nurse with 3 agency positions. Most lenders will not be able to lend to her as the risks of comeback to them later from the FSA is too great. The nurse until now benefited from self cert and fast track.

This will be a very great tradegy for millions.

Fraudbuster - I get why you want a clean industry but you need to consider 'outomces in the round'.
On the one hand 10,000 are not repossessed, but on the other 3 million cannot get a mortgage now.

This reminds me of the short sightedness of world war 1 generals far removed from the day to day reality.

Mark my words, there will be an outcry in the future when millions are forced to rent from already well off landlords.

jockosjungle

Why is it so bad that they want Self Employed people to have a bit of history doing it before giving them a mortgage. Maybe what they actually want to see is a full year of working and some accounts sent to HMRC. yes many self employed people do well and have profit rich accounts but many also earn coincidentaly just above the NI threshold, someone with an income of £5k should be allowed to self certify a mortgage?

How many new businesess fail? Should people add losing a house to losing their business just because they optimistally thought the business would be successful in the first few months?

coldstreamalways

What about self employed people who don't own a business? I'm thinking of dental associates who are classed as self employed by HMRC but don't own the practices they work in..??

jockosjungle

They'd need two years accounts, there are many advantages to being self employed, this is just one example of a disadvantage. In all honesty how many people are newly self employed that this will affect?

R

Gorgeous_George

What about those businesses that receive a lot of cash in hand income?

About bleeding time IMHO.

GG

nzmegs

Oh dear yet another thing in our way. Both self employed and in need of a remortgage. As if it isn't hard enough!

coldstreamalways

jockosjungle wrote: »

They'd need two years accounts, there are many advantages to being self employed, this is just one example of a disadvantage. In all honesty how many people are newly self employed that this will affect?

R

Thank you, I'm currently "employed" but am thinking of leaving for the self employed route in a year or so. If I needed to remortgage a year into my self employed status, what would I do then?

grey_lady

It's not even as simple as having two+ years signed off accounts. If for example, your business was hit by the credit crunch last year making your profit was less than the year before then at least one big lender that i know of looks negatively at that - they like to see profits increase year on year.