THE FINANCIAL crisis was arguably the biggest economic disruption in our lifetimes, and it followed a period where things just seemed a bit easier, especially the ability to obtain credit.

Over the years, lenders had moved from an environment where a request for the smallest overdraft was met with an invitation to meet the local bank manager, to a situation where even a dog, Monty the Shih-Tzu, was offered a gold credit card.

The fallout from the crisis led to a significant and prolonged period of austerity, manifesting itself not only in severe cut backs in government spending but the collapse of businesses and the subsequent and widespread loss of jobs.

In 2007, unemployment stood at around 1.6 million and by 2010 it had hit 2.5 million, an unemployment rate of 8 per cent, the highest since 1996. The good old days were very much over and it was during this time that a new phrase came into common parlance – the credit crunch.

Lenders were no longer lending as freely as they once did. And certainly not to dogs. Lending criteria tightened, meaning the days of 125% mortgages and obtaining a mortgage without the need to verify your income (self-certification) were no longer available, or at the very least few and far between.

Although lenders have eased their criteria for those in full-time employment, the subject of mortgage lending to the self-employed remains an area of uncertainty. And with employment patterns changing over the last few years, this subject has become even more important.

The self-employed population has risen from 3.3 million people in 2001 to 4.8 million in 2017, and while there are no specific figures to indicate how many of these individuals require a mortgage, it’s reasonable to assume that many of them would still like to own their own home, potentially using a mortgage to do so.

The perception of strict lending criteria has resulted in some confusion among many who are self-employed, and an impression that they simply don’t fit what lenders are looking for.

A common view is that without at least two years of accounts or tax returns, no lender will entertain you. While it’s a fairly standard requirement, if you don’t have these, don’t give up. Some lenders will consider your application if you can prove a track record of regular work, for example if you have left an employed salaried position to work as a contractor in the same industry and you can provide evidence of work lined up. Some may also lend based on at least one years’ figures plus a projection for year two.

For sole traders, lenders will typically base what you can borrow against your net profit figure. If your income has increased, they’ll usually take an average of the last two years. If it has decreased, they’ll usually work on the latest year figure.

Similarly, if in a partnership, lenders normally take into account the share of net profit while for those who have set up a limited company salary and dividends will usually be considered.

Day-rate contractors have become ever-more familiar, with some lenders willing to calculate your annual income on the basis of your day rate, usually assuming you have 12 months or more continuous employment, with six months of the contract remaining, or have two years’ continuous service in the same type of employment. Lenders usually assume you work five days per week for 48 weeks of the year and therefore can easily annualise your day rate when calculating your affordability.

If you do your own self-assessment and HMRC calculate it for you, most lenders will accept the form SA302 and tax calculations overview documents instead of accounts. If you don’t, they’ll normally contact your accountant.

Like other potential borrowers, check your credit history, minimise your credit checks before you apply, and ensure you’re on the electoral roll. And a healthy deposit wouldn’t do any harm.

Persistence should be your watchword, and if one lender is unable to provide the mortgage, don’t despair - not all lenders use exactly the same criteria. Seeking some independent advice will ensure you have access to the whole market, and hopefully that dream home could become a reality.

Kevin Gardiner is mortgage operations director at Aberdein Considine.