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Mortgages

Why January heralds a headache for the self-employed

The dreaded tax return deadline is almost upon us. Self-employed workers the length of the country are scrambling to get their accounts to HMRC before midnight tonight – or face fines of £100 or more. Lame excuses such as “the dog ate the paperwork” just won’t wash with the taxman.

To add to this year’s headache, credit cards have been banned as a way of paying your bill, which could have a significant impact, as there were 454,000 personal credit card tax payments worth £741 million in 2016-17, according to HMRC.

One way for self-employed workers to overcome this hurdle could be to free up equity in their home through a remortgage or second charge mortgage – sometimes known as a secured loan - from a specialist lender like Together, which could provide the fast funding needed to pay an outstanding amount.

In a recent case, we helped a self-employed company director with multiple income streams, when they needed £60,000 for a bill from HMRC – and who would have been unable to get funding from mainstream lenders to cover the full amount.

Together’s underwriters fully assessed the customer’s situation and provided a second charge loan for the full amount, secured against their £460,000 property. This allowed them to pay off the bill, which had been accruing an eye-watering £1,000 in interest each month - reducing the customer’s outgoings.

A second charge loan may not be the best option for everyone, so it’s important to take financial advice, but it could be one way that specialist lenders like ourselves can help the self-employed, as mainstream finance providers continue to tighten their eligibility criteria for mortgages and loans. Second charge loans can be used for all kinds of purposes, including growing a business or buy-to-let portfolio, debt consolidation, paying a deposit for a son or daughter’s new home, or improvements to the borrower’s own property.

From our experience, self-employed borrowers often don’t fit the mainstream mould. For example, they may have an incomplete credit history, perhaps because they have just launched their own business.

At Together, our mortgages cater for self-employed applicants including sole traders, self-employed contractors, those in partnerships or LLPs, and shareholders in limited companies. They can apply for loans of up to £1 million for house purchase and remortgage, on first and second charge, and we make it easy for customers to borrow, even if they are a self-employed worker only has 12 months’ trading history.

We’re confident that our flexible, common sense approach to mortgages and loans will mean we’ll be able to meet the borrowing needs of even more hard-working people who fall into the self-employed category.

For more information, visit www.togethermoney.com/personal-lending/mortgages/self-employed/.

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