Many self-employed people choose an interest-only self certification mortgage.  This is  true especially of people just entering self-employment through freelancing or starting their business.  With initial incomes unpredictable, it can be a brilliant idea to take an interest-only mortgage to reduce outgoings and reduce pressure on any business to meet certain financial objectives in the short term.  Obviously in starting a business, it’s important to get the quality of the service sorted first (processes, marketing, staff etc) and there may well be a lag between starting the business and the ability of the business to make money.  Indeed, those businesses need investment at start.  So, interest-only mortgages can be to help new business owners to get going.

Additionally, many self-employed people have periods of time when their income reduces, and have higher income periods.  Interest-only mortgages often help these people to reduce their outgoings during the lower periods and over pay during periods where they’re more buoyant.  Examples of this are people working on a self-employed basis in the tourism industry where seasonal differences in income make an interest only mortgage a very good idea.

Whether an established business owner with seasonal income, or a business starter unsure of the first three months, it’s important to put in place plans to be able to repay the balance of the mortgage loan.  After all, interest-only mortgages are only paying off the interest and are not paying off the capital; therefore the mortgage balance is not reducing.  So whether it is paying in lump sums during profitable seasonal periods, or whether it be intending to invest and pay off using another investment vehicle, it’s important to put in place a plan imposed and understand how an interest-only mortgage works.