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SUMMARY: If you work on a contract or are self employed you can get a loan, but it may not be as easy as for traditionally employed people.
Not traditionally employed; not a traditional loan
By Melinda Varley
In 2004, over £41.2bn was lent to the self employed or those with poor credit history but even with
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- Determining How Much Money You Need to Borrow
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- Options for Individuals with Bad Credit
- How do you get a bad credit history and what can you do about it? This article provides some ideas
- Car Loans Drive down the cost
- Usually the cheapest way to finance the purchase of your car is usually with a personal loan. But there are other methods. This article explains.
- Fraud. Beware of the fraudsters
- Fraud is big business. This article explains six to watch out for.
- Loans. How to select a secured or unsecured loan.
- All loans are either secured or unsecured. This article explains the difference and the factors which determine which to select.
For people who are self employed or working on a contract to contract basis, banks may be concerned about your long term income status and ability to maintain you repayments for the loan. Therefore, making it difficult for them to be able to grant you a loan.
Some lenders may be happy if you can prove that your contract has been renewed by the same employer while others may want to see a pattern of renewals over a one or even a two-year period.
If you've just started your job lenders will usually look at your case individually and first jobbers may find themselves being asked to wait entirely. But essentially, what lenders are most interested in is seeing how employable you are, such as, if you have long term experience in that particular industry.
Using a middleman, such as a broker, can help you with your research as a broker will know exactly what sorts of people the various lenders will consider and under what circumstances. A broker may also have access to special deals which may not generally be available.
Because in many cases the granting of loans is decided by computerised credit scoring and recorded on a central database, if you are turned down by one lender that fact will show up at the next lender you approach.
A second lender might then turn you down just because the check will show you were turned down elsewhere, using a broker can also help you get around this.
But people who have a poor credit history or are self employed are finding it easier to borrow money to buy a home, market analyst Datamonitor has said. Banks are becoming increasingly willing to relax their rules and restrictions due to the mainstream market becoming saturated.
However, the process still will not be easy. If you are self-employed, you will probably be asked to show three years' statements of your total earnings. If that is not possible, the lender may also accept a letter from your accountant.
Your home may be repossessed if you do not keep up your repayments on a mortgage or any debt secured on it.
Loans may be secured on your home or other property.
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