In the days before the credit crisis, secured loans and remortgages were available for both employed and self employed borrowers in identical ways.
When assessing an applicant’s suitability for remortgages and secured loans, the provider wil always first and fore most consider the equity on the property of the applicant.
Equity is the difference between the value of the property and the mortgage balance.
Someone with good equity will receive a better rate of interest than a person tight for income., and the more equity the cheaper the rate of interest granted.
Prior to the credit crisis homeowners were in the position of being able to obtain a secured loan at 125% LTV, meaning that these homeowner loans were available to those extremely tight for equity.
Self employed homeowners were always in eligible for these 125% secured loans, and only those in employment were eligible.
Self employed applicants could still borrow at lax loan to values, with Nemo Loans advancing loans at 100% to the self employed.
Status has also been relevant in the secured loans and remortgage market for both the employed and the self employed with those with a good credit rating obtaining better interest rate than those with a poor credit score.
Earnings also come into the equation when granting any type of loan, including remortgages and secured loans.
This meant that in the past, the self employed could often obtain loans, etc. easier than their employed counterparts, as the self employed could self certify their own salary without any backup proof. They sometimes increased their earnings to enable them to obtain the loan, mortgage, remortgage, etc.
This all changed with self certs being totally outlawed for remortgage and mortgage applicants and full accounts were required.
Only one homeowner loan lender was prepared to accept self declarations of net profit but the interest rates were steep and the loan to value restricted.
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