Why Self Employed Loans Were More Achievable
By Liz Moir
The self employed were in a stronger position as regards secured loans than those in employment.
Self employed loans, as long as they were secured loans, were easier to obtain than employed loans were as self employed loans were never going to be refused on the grounds that the profit was too small.
All secured loan lenders accept a different minimum income.
In the past Blemain, for example, asked for a minimum income of 10,000 which could by no stretch of the imagination be considered high.
Paragon, the Solihull based secured loans lender, before they ceased granting new homeowner loans at the start of the recession, required a minimum household income of 15,000. They also had the requirement that one of the applicants earn at least £13,500.
This could rule out people who had £upwards of 15,000 family income and if someone earned14,000 and the other say 13,000 was not enough.
This made little sense, as the scenario of 27,000 is 12,000 in excess of the minimum income required but nevertheless it did not fit their criteria.
After this initial requisite, secured loan lenders in general accepted 40% of gross income to cover certain financial outgoings which in the case of homeowner loans was the mortgage payment, the loan being arranged and any unconsolidated credit on loans, credit cards, hire purchase, etc.
It was far from unusual for employed applicants to be refused a loan in that they did not fit as regards the income criteria demanded of them.
Sometimes it really made little sense, because often the applicant earning slightly less than the required income could have a much smaller mortgage payment and have more disposable income left at the end of each month, but would be refused a loan.
At the same time an applicant, meeting the minimum income needed to borrow, could obtain a secured loan although more over commited financially that the declined applicant.
It was seldom a situation that self employed were turned down for secured loans due to shortgage of net profit as they simply stated their own net profit.
Self certs. was excellent for the self employed unable to really provide total proof on their profit wh who did not have an accountant.
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