Non Status Mortgages UK.

If you do not have a credit record or you cannot provide any proof of income, then you are regarded by lenders as having no status. Thus non status mortgages could be your only option. This is a huge risk to a lender, so you may find that you have to pay higher interest rates to cover those risks. You may also find that you will need to find a large deposit to cover the value of the home, as your lender will only lend you about 70% of the value.

It's not just people with credit problems or no mortgage history for whom non-status mortgages are the only option. Those people are self-employed but without 3 years accounts, or maybe people who are employed on short term contracts. High street lenders are unlikely to lend to these people, so their only option could be the sub-prime mortgage market. It is very easy to be in the position where you have no option but to get a non-status mortgage, even if you are very aware financially with the history of a model borrower. It doesn't matter how you see yourself, it matters how lenders see you. Do bear in mind though that before you try your luck on the sub-prime market you should go to a mortgage broker who can search the market for a good deal for you.

It is ironic that having a good accountant can actually be your downfall in the mortgages market. Should you be self-employed and wanting to avoid paying a good deal of tax your accountant would have tried to downplay your profits over the past few years, making your business look less healthy at the time, which means you will only be allowed a smaller mortgage. It is a pity sometimes but many high street lenders don't look at your ability to pay, and what you can afford but stick to rigid rules on what they will lend in order to reduce their risks.

Because of this need to reduce their risks, many high street lenders won't actually offer non-status mortgage. If they do they can make things very hard for you, by demanding business plans or proof that your turnover is increasing every year. They look at your past to ascertain what to lend you, even though businesses are likely to grow each year. Should a good deal of your money be tied up in your business, you may also find it difficult to find the money for the large deposit required.

At some point, mainstream lenders will begin to introduce some common sense, and adjust to the changing working world of short-term employment. Until then, you will have to look for expensive products with some very opportunistic lenders.

 

 

 

 

© AskFinancially.com 2008

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