A study by the Office for National Statistics has shown that more than 4.6 million people are now self-employed. Research suggests that around half of these people will struggle to get onto or up the housing ladder.

For employed applicants, proving your income is relatively straight forward. In most cases you just need 3 of your latest payslips along with bank statements to back them up. For self-employed applicants however, it isn’t quite as straight forward. In most cases you will be needing 3 years accounts or SA302’s (which take at least 2 weeks to obtain causing a significant delay on the whole process).

The other issue is that with employed applicants it is fairly straight forward for a lender to decide how much is affordable to you however for people that are self-employed it can be open to interpretation. This can mean that even if a decision in principle is agreed, there is a good chance the amount a lender is willing to loan you could change once they have assessed everything.

Our advice to those people who are self-employed is to make sure that before applying for a mortgage you make sure you have suitable documentation to prove your income. It is also important to have a big enough pot of money for the deposit but also a little extra if needed to reduce the loan to value to keep the lender happy. Different lenders take into account different figures such as net profit, dividend and salaried income. For this reason the way in which your income is derived can significantly influence which lenders you should approach making it important to consult a mortgage advisor on the best route to take. 

After a quiet third quarter in the property market there is an expectation that things are going to pick up in the final three months of the year.

According to a report by Reuters, the credit conditions survey showed that in the third quarter of 2014 there was the biggest fall in the amount of credit the lenders were able to supply since the last three months of 2008, when the Lehman Brothers collapsed. (http://reut.rs/10IHmRT)

We have already seen a number of lenders reducing their rates and others are expected to follow in a battle to gain market share and hit end of year targets which may have slipped away due to the quiet summer.

This could be an ideal time to either obtain a new mortgage or remortgage a current property to secure a cheap fixed rate product. There is an expectation of an interest rate increase at some point next year which means we may never see rates this cheap for some years.

As we mentioned in one of our previous blogs ‘What documents will I need when applying for a mortgage?’ we advised obtaining a copy of your credit report before applying for a mortgage. This is so you can accurately calculate how much money you can afford to borrow and also eliminate any delays further down the line that could arise from having a discrepancy on your file.

This week Experian published an interesting article about the top 10 myths of credit. We have highlighted some of the points we found interesting and that should be considered prior to applying for a mortgage.

The first myth is that items in your credit history stay on file forever. Credit reports are designed to give lenders a good picture of your current situation so any issues in the past are irrelevant. Most information about your credit history is therefore held for around six years.

The next interesting myth is that friends and family living in your home affect your credit rating. The only people who can affect your own credit rating is people who you have a financial connection with such as being on a joint mortgage. Living with someone is not a financial connection.

The final myth is that it doesn't matter how many credit accounts you have. Lenders want to be sure that you can afford more credit, so they prefer it if you don't already owe large amounts on multiple accounts. They can also favour customers who aren't heavily reliant on the credit they already have. So try to keep your regular borrowing on cards to less than 25% of your credit limits if you can.

To see the full list of the top 10 credit myths go to http://ex.pn/1l27VsL.

It has been 5 months since the Mortgage Market Review (MMR) was introduced and there does not appear to be a sign of things settling down any time soon.

One of the key parts of MMR is the change in how a borrower’s affordability is calculated. There have been a number of stories in the press of how customers with excellent credit scores have never missed a mortgage payment but are unable to secure low fixed rate products due to the change in affordability calculations. From our perspective it hasn’t been that we have been unable to obtain a mortgage for clients but it has taken much longer than it once did.

You must also be prepared for the process to take slightly longer. In an article by the Telegraph we saw that 56% of mortgage offers take longer than two weeks to get to an offer stage in comparison with 44% last year. Just 9% of mortgage approvals are made within five days, compared to 13% last year and 25% in 2012. (http://bit.ly/1lPhFsm)

This is what appears to be the biggest issue. Time. In another article by The Telegraph we saw that some banks are now conducting 3 hour interviews to apply for a home loan. (http://bit.ly/1tohh6y) If you wanted to speak to three different lenders this would take up a significant chunk of your time. By contacting an experienced mortgage consultant you avoid having to have numerous interviews with the different lenders. We spend around an hour with our clients discussing their circumstances and requirements in the comfort of their own home, before contacting numerous lenders to find the best available product.

Due to the heavy increase in mortgage activity this year, we have seen many lenders competing to offer the most attractive mortgage rates along with added incentives.  Leeds Building Society as an example, did shakeup of their buy-to-let products and offered free valuation and free legal advice. Halifax are offering cash back to first time buyers with a Halifax current account.

This week we also saw builders using incentives to attract a large proportion of the busy property market. As reported in the Yorkshire Evening Post, Ben Bailey Homes launched an exclusive ‘Express Move’ incentive. “The scheme has been designed to help buyers find their perfect home at the development and move in quickly. Those who reserve a property this summer can benefit from a whole host of added extras, with stamp duty paid, legal fees and mortgage valuation fees covered and a themed landscaped garden worth £5,000 included in the price”.

The incentives offered don’t just stop at free legal advice and fancy gardens, one Russian bank took the incentives to a whole new level and has begun offering cats to clients who obtained a mortgage through them! (http://www.bbc.co.uk/news/blogs-news-from-elsewhere-28951981)

As always it is important to look passed the initial incentives that lenders offer no matter how great they may seem. It is very important to look at the whole picture. Although getting cashback and free cats sounds great, these products aren’t always the best option to take. 

This week we heard that Lloyds Banking Group cut the amount it is prepared to lend by 70 per cent from £500,000 to £150,000. This appears to be a tough decision on first-time buyers, who make up around 85 per cent of Help to Buy sales, especially in areas where house prices continue to soar making it even harder for first time buyers.

We also heard that the Scottish Government's Help to Buy scheme has run out of money for this financial year - only three months after a new round started.

However given this, the Help to Buy equity loan scheme seems to be more popular than ever, with a 91 per cent rise in completions during June, taking the total number of home purchases supported to 27,167 since the scheme’s inception in March 2013. In June there were 4,357 completions, up from May’s 2,274 completions. In total over the second quarter there were 7,772 completions, up from 6,524 in the previous three months. Virgin also removed its £30,000 minimum income cap on Help to Buy equity products. (Source: FT Adviser)

Although there is some mixed news at the moment regarding the Help to Buy scheme and we have seen a decline in the number of enquiries, we don’t expect this to be the continuing trend. The Help to Buy scheme is still an excellent incentive in our opinion and one in which people should take advantage of whilst it is still around!

This week we have seen a number of mortgage lenders refresh their buy-to-let products including Leeds Building Society, Coventry Building Society and Virgin.

This is due to the rise in demand for buy-to-let mortgages recently. According to the Council for Mortgage Lenders the proportion of the mortgage market taken up by buy-to-let deals rose to 13.4% in the first quarter this year compared to 12.9% in the first quarter of 2012 and 13% in the final quarter of 2013. (http://www.landlordexpert.co.uk/category/property-investment-news/)

Here at RA Mortgages we have seen the number of requests for advice on buy-to-let mortgages rise with a large number of people looking to remortgage existing loans to find a better rate and also to secure a fixed deal to protect them from any rate increases. Research done by Mortgages for Business shows that the number of five-year fixed buy to let mortgages has doubled since 2012. 

It is an excellent time for new and existing buy-to-let investors to look at securing a mortgage. As well as the already mentioned refreshed mortgage products from numerous lenders, rents in the UK are increasing as well. The HomeLet Rental Index shows that the average UK private home rent rose by 6.3% over the year to June 2014. The average rent in the UK now stands at £862 a month, compared to £811 a year ago.

One thing that we stress is that before diving into anything make sure that you have taken the time to consider the best possible options for you and consult a mortgage professional on the most suitable investment strategy for yourself.