Remortgaging With No Proof Of Income Is It A Possibility
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Remortgaging Without Proof of Income: Is It Possible?
Overview
With around three and a half million self-employed individuals in the UK?"a number expected to rise?"many face challenges when it comes to securing a mortgage. Traditional lenders often hesitate to work with those unable to present standard income documentation like pay slips.
The Self-Certification Solution
For the self-employed, self-certification mortgages offer a viable alternative. Instead of traditional proof, borrowers declare their estimated annual income. This option is also attractive for those with commission-based or fluctuating income.
Financial Considerations
Mortgages, whether standard or self-certified, are significant financial commitments. Unfortunately, self-certification mortgages usually come with higher costs. This is because many small businesses statistically cease operations within two years. As a result, lenders often require higher deposits and offer a loan-to-value ratio between 75% and 90%, compared to the 95% typically offered with standard mortgages.
Why Remortgage?
Changes in circumstances such as family expansion, home improvements, or debt consolidation can make remortgaging attractive. Some mortgages are portable, allowing easy transfer to new properties. Even those with self-certified mortgages can explore remortgaging options, either with the original lender or by shopping around for competitive rates. Consulting a mortgage broker can be beneficial but may come with fees.
Market Dynamics
Given the competitive mortgage market, borrowers can potentially save by switching lenders for better rates. However, this can involve penalties for early exits and fees for joining a new lender, along with legal costs.
Flexible Options
Self-certified mortgages may also offer perks like financial holidays and flexible repayment options. These features are beneficial for those with variable incomes, providing options to adjust payments according to cash flow.
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In summary, while remortgaging without traditional proof of income is challenging, it’s achievable through self-certification and strategic financial planning. Exploring options and staying informed about market trends can lead to better financial outcomes for the self-employed and others with non-standard income streams.
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