Getting a loan can feel daunting, and being self-employed can add an extra layer of complexity. You might wonder if you'll even be considered for approval.
In this blog, we'll explore whether you can access these solutions if you’re self-employed, helping you determine if it's a viable option for you.
Is it possible to get a secured loan if you’re self-employed?
While it may be harder, it is possible. Since your income might fluctuate, lenders might need a bit more assurance. Therefore, they may charge higher interest rates.
These loans are backed by properties, which gives lenders some extra confidence. However, this does mean your property could be at risk of repossession if you fail to repay the balance.
Additionally, not all lenders are used to working with self-employed applicants, so it's important to shop around and find one that can help in your situation.
When you're applying for a loan, make sure you have all your paperwork in order. This includes things like proof of income and address. Having everything ready will make the process smoother and show lenders that you're responsible.
So, while it might take a bit more effort, getting a secured loan whilst self-employed is certainly possible. Just take your time, do your research, and you'll find the right lender or broker to help you out.
What can self-employed secured loans help with?
Whether you're aiming to grow your business, venture into something new, fund home improvements, or simply get your finances in order, these solutions can help you.
In fact, you can use these loans for just about any legal purpose that comes to mind. So, if you've got a goal in sight, these solutions might help you make it happen.
Just remember, it's crucial not to take on more than you can handle and ensure it's within your means. This is especially vital since your property serves as security for the loan.
What documents do you need to provide?
It's pretty similar to what you'd need if you were employed, but there are a few key differences.
You'll probably need to provide:
- Some form of ID, like a passport or driver's licence.
- Proof of address: This is very important since the loan will be tied to your home, so you'll need to show that it's yours.
- Tax return documents: These are usually called SA302.
- Any recent bank statements you have.
- Accountant's certificate: In some cases, lenders may need an accountant's certificate. This gives an outline of your business's profits and a forecast for the current year.
The main difference lies in the tax return documents and accountant’s certificate, which employed individuals do not need to provide to a lender.
How to apply for a self-employed secured loan
Applying as a self-employed individual is much like applying if you were employed. You just need to take your time researching different providers to find one that suits your needs.
Once you've found the right one, simply reach out to them and let them know you're interested. From there, they'll take care of the rest and will get your application underway.
Where can I get these solutions?
If you're looking for a loan, you have two options: you can approach a lender directly or use a broker.
Going directly to a lender can be beneficial if you're certain about using their products and think you may be likely to get approved. It may also be a more cost-effective choice since you bypass the extra fees that may be associated with using a broker.
However, using a broker has its advantages. Despite potential extra fees, brokers have access to a broader range of providers. This enables them to explore various products and lenders, which may increase your chances of approval. They're also good at matching applicants with suitable providers from the get-go.
It's important to note that if you're declined by a lender, this could negatively impact your credit score and may affect your chances of getting finance elsewhere.
You can learn more about the differences between a lender and a broker in our blog.
Summary
Getting a self-employed secured loan might seem daunting, but it's certainly possible with the right approach. While the process may need extra effort and careful research, there are options available to support your needs.
Whether you choose to approach a lender directly or use a broker, take the time to weigh up your options and select the best fit for your needs.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
