By Ed Emerson
In the UK self-employed mortgage seeker’s application process there is one mistake for me that stands out above all others – the “Insanity Cycle.”
What I mean by that is when you get yourself into a process of repeated mortgage rejection, until a mortgage or re-mortgage becomes impossible, at least in the near-term.
And the really bad news? It was all my fault.
Let me explain…
When I first applied for a UK self-employed mortgage:
- I never checked my credit first,
- Never thought about which banks would even consider my type of application,
- Had no idea what a detailed view of my outgoings really looked like (what banks want to know since the Mortgage Market Review or MMR in 2014 has really changed things!), and
- Assumed – because I was making a lot more than I was as someone’s employee on PAYE earnings – that I would be met at the bank manager’s door with a bottle of single malt whisky and a cigar.
Ok, maybe I wasn’t quite that bad, but things definitely didn’t go as planned.
What I didn’t realise was that:
- An error was appearing on just one of the three credit agency reports,
- I had a history of late payments on one account due to the timing of a direct debit, and
- The way I was paying myself (maximum salary before the tax threshold, and sporadic dividends as I needed them) was considered shambolic by every lender I saw.
And I simply refused to look at this from the banks’ collective perspective.
In fact, I was, by definition, acting like an insane person – someone who repeats the same process over and over and always expects a different result.
Eventually, after receiving my share of bruises, I took a step back and applied a bit of business thinking to the process. That’s when I realised that the process doesn’t have to work this way.
The formula I discovered is detailed in our forthcoming report – The 5 Steps to a UK Self-Employed Mortgage.
But how I broke the cycle of insanity was by understanding two key principles:
1) I needed to think about the process differently, and
2) I needed to follow a few basic rules in order to exponentially improve my odds of getting a mortgage or re-mortgage as a self-employed person. And the same applies to consultants, directors etc.
Want to know more?
Why not see what HNW Magazine’s Self-Employed Mortgages section here has to offer you in terms of advice, guidance and options.
And look out for HNW Magazine’s report The 5 Steps to a UK Self-Employed Mortgage out soon, and take advantage of the mistakes others have made so that you don’t have to.
Ed Emerson, Editor, HNW Magazine