In the days before the credit crisis, secured loans and remortgages were available for both employed and self employed borrowers in identical ways.
The first thing that a lender takes into the equation before advancing secured loans and remortgages is the available equity on the prospective borrowers property.
The figure that remains when the mortgage is deducted from what the property is worth is the equity.
The available equity is the main fact in determining the interest charged, and the better the equity, the lower the interest rate.
Prior to the credit crisis homeowners were in the position of being able to obtain a secured loan at 125% LTV, meaning that these homeowner loans were available to those extremely tight for equity.
These 125% LTV homeowner loans were not available to everyone, and the self employed were excluded from making application.
Self employed borrowers were certainly not left out in the cold as regards equity at that time, with Nemo Loans being prepared to advance loans at 100% to the self employed.
Status has also been relevant in the secured loans and remortgage market for both the employed and the self employed with those with a good credit rating obtaining better interest rate than those with a poor credit score.
Income is also very relevant with lenders of both secured loans and remortgages only allowing a certain amount of a persons income.
In the past, with this being the case, it could be easier for the self employed to fit in income better than the self employed who could at that point declare their own earnings . Many were prone to hike up their income to obtain the finance.
The recession ended all this, and it became difficult for self employed to obtain remortgages and mortgages, ard full accounts were now required.
Only one homeowner loan lender was prepared to accept self declarations of net profit but the interest rates were steep and the loan to value restricted.
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