One of the things that often worries people thinking of becoming self-employed is whether they will be able to borrow money – particularly mortgages. It’s understandable because it used to be the banks would look down their noses at someone who didn’t have a payslip each month. Now, though, it’s much harder not to be lent money, whatever your employment status!

 

There are three main options for freelancers looking for cash (aside from doing some actual work, that is):

 

 

If you have self-control, credit cards can be a useful way of organising your finances when you are self-employed.

 

 

So long as you have a pretty decent credit history, getting a loan should be a pretty straightforward process. But don’t just go straight to your bank and get the first deal they offer you. Shop around. Start with our best loans and see what good deal you can get there.

 

Or look at alternatives. The new online lending and borrowing service Zopa uses money from individual lenders (like you and me) to lend directly to individual borrowers (like you and me). It tends to have good rates and it’s probably more open to self-employed borrowers than the traditional banks as it uses different criteria to work out if you’re a good bet or not. Note that Zopa has a strong preference for people with good credit ratings, such as homeowners and people with good credit ratings.

 

 

 

Buying a house can be a tricky business if you haven’t been self-employed for long, but if you have at least one year’s-worth of accounts to show for yourself, it’s really not that hard. To qualify for most mortgages you need to be able to show a decent stable income which is not easy for a lot of self-employed types. However, because the banks know that more and more people are going it alone, they are generally getting a lot more flexible in their approach. The lenders are also coming up with mortgage products that are really interesting to people with different kinds of incomes. 

For example, Self-certification mortgages – where you don’t have to give proof of your earnings – are one answer to the problem of showing three years’-worth of accounts. 

 Learn more about the mortgage here.

 

 

 

 

 

Basically they allow you to apply for a mortgage based on your view of your real income and what you can afford to pay back each month, rather than the mortgage company’s calculations from your proper accounts. This is because when you are freelance your accountant tries to make it look like you don’t earn much – for tax purposes. This works against you when you go for a mortgage so the Self-certification (Self-cert) mortgage is really handy. You say how much you earn in real terms and the mortgage company believes you!

 

You don’t have to be a freelancer to find this useful. Even if you are on a salary but you believe you could keep up repayments on a larger mortgage than you would usually be allowed (perhaps you know you will get a bonus or an inheritance soon) then a self-cert mortgage will allow you that extra money.

 

But there’s a downside:

 

 

 

If you are put off by the idea of a self-cert mortgage – or you can’t get one – another idea is to shop around for the highest earnings multiple on a traditional mortgage.