With the financial upsets of 2009 there was always going to be a lot of unsettled areas within the finance sector. And amongst the normal types of loans being provided to borrowers and small businesses there is a sub-sector who will find it even harder to get loans or mortgages.

The sector is the large percentage of self-employed workers who historically were able to get a loan based on self-certification criteria. Self-certification is where the borrower does not have to show any proof of how much they earn.

These types of loans were open to abuse from brokers and borrowers alike with people applying for homeowner loans which they struggled to repay. Being self employed doesn’t always guarantee work all year round. This in effect left them exposed to possible shortfall in income and ability to repay loans etc.

What will happen to this relatively large sector of workers who want to get aloan for all manner of things including mortgages?.

Well, it seems like the regulatory body has devised a straightforward solution and that is to give lenders the power to do a lot more due diligence on borrowers. And more specifically the borrowers will now need to show their tax returns in order for the lender to get a much clearer idea on how much the person is earning. And along with that will be new procedures and checks on exactly what the borrower is spending compared to their income.

This wont be warmly welcomed by those working for themselves but given that a lot of recent repossessions were due to non-payment from those with self-cert mortgages it’s easy to see why. This was mainly due to borrowers giving inaccurate earning information and in lots of cases loan brokers happy to inflate the borrowers salary to ensure the borrower got bigger loans and the broker got bigger commissions.

It is now much more difficult to get a self-cert loan due to the unscrupulous activities of others. But at least there is still a route to getting a loan, even if it’s going to mean jumping through lots of hoops first.

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