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Self-employed does not always mean lower risk


In response to your recent story that the recession has led to a million more individuals becoming self-employed and they will find it difficult to get mortgages (Mortgage Strategy Online), I’d like to make a few points.

First, willingness and determination do not repay mortgages, hard cash does. And hard cash may or may not be the product of willingness and determination.

Second, the majority of small businesses go bust in the first few years. If you get through this period you may be successful but lenders can’t be sure.

Third, lots of small firms are going bust at the moment, not because of bad bankers not lending but because they never stood a chance, even in a normal market environment. The fact is that the past decade of growth was a credit-fuelled anomaly.

Many small firms are going bust not because of bad bankers but because they never stood a chance, even in a normal market environment

We all know those with the money make the rules and I’m sure banks are still delighted to lend to good risks but less so to unknown risks. This has always been the case and always will be.

Do people not consider the downside of greater scrutiny on mortgage applications when they take the decision to become self-employed?

I’m sure there are plenty of self-employed individuals who have three years’ worth of accounts who lenders would be more than happy to offer mortgages to. You have to ask yourself why lenders are not strong enough to offer mortgages in this field.



Losing my cool with lenders that elbow me out of the way

Lenders that approach my clients are starting to get my goat, with Abbey and Nationwide being the worst culprits. I regularly review my clients’ files, especially when their deals are nearing an end. I recently contacted a client whose five-year fixed rate is coming to an end in June only to be told that Abbey […]


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