Self declarations of a business profit has been a popular way for the self employed to provide their earnings when applying for remortgages and mortgages.
This remortgage and mortgage product was available to the self employed without any real proof of income.
There are many self employed who receive a fair amount of cash in hand for their work, and although they should declare all earned income to the Inland Revenue whether cheque or cash in hand income many do not declare the cash part.
These are individuals such as trades men, including plumbers, electricians, fencers , landscapers, etc. who carry out a lot of their work for private persons who frequently pay them in cash instead of by cheque.
Many diners in restaurants pay cash for their meals, and as such restaurant owners can sometimes have profits that officially show less than they really are.
This all means that the annual profits made officially by these self employed is not a true reflection of their genuine income which is in fact much higher.
Many self employed do not have an accountant to do their books but do them themselves which all means that when needing a mortgage or a remortgage they also require to self declare their profit.
As these self employed have earnings higher than that shown on their accounts, they probably have profit as stated on their self declaration, and therefore they can comfortably afford the mortgage or remortgage that they want.
However for many the self certs. provided to obtain mortgages and remortgages were a pack of lies and they were obtaining a financial product that they simply could not afford to pay back.
This lead to nothing but stress and often mortgage arrears or even repossession of the property.
As the mortgage lenders were not willing to self regulate, the FSA have had to step in to make mortgage regulations stricter.
In the past they expected the mortgage lenders to lend responsibly but as this did not happen the FSA have had to tighten up and are abolishing self certs.
Have a look at remortgages
Tags: Business Credit, debt loans, homeowner loans, Mortgage, mortgages, remortgage, remortgages, secured loans —
