Too old, too poor, too risky...

Securing a mortgage is an obstacle course for large parts of the population. But it's getting easier, says HARVEY JONES

The self-employed, contract workers and the late middle-aged all share a strange power - the ability to make mortgage lenders tremble.

These renowned menaces to society all fall outside the standard lending criteria of the major banks and building societies, as do many otherwise upright citizens. You might be earning pounds 50,000 a year in computing, but if you're on a fixed-term contract you could have as much chance of getting a home loan from a high-street bank as a mercenary fighting in some far off war.

But don't panic. The situation might not be as gloomy as you imagine. There are lenders willing to help. It's just a case of hunting them down.

The self-employed

The growing band of self-employed, contract or freelance workers may face problems finding a willing lender - but all is not lost. Your bank may turn you down but increasingly there are other lenders who won't.

Many high-street lenders demand exhaustive proof of your business viability, for example, three years of audited accounts, or, if they're feeling generous, two years and a projection. Fine if you have it, but not so easy if you are newly self-employed, or if last year your earnings took a dip. Another problem is that audited accounts sneakily aim to make earnings look as low as possible to minimise the tax bill. The side effect is to reduce the amount you can borrow.

However, a number of specialist lenders will grant a mortgage after seeing your first year's accounts, or a letter from your accountant confirming your projected income (see the list at the end of this article). If you receive a trade journal, look out for ads in the classifieds section from lenders targeting workers like you. The interest rate may be slightly higher to reflect the greater risk - expect between one and two per cent.

I've been forced to switch from my current lender, Bristol & West, after falling foul of its rules on lending to the self-employed. After going freelance I requested a larger mortgage but was turned down until I could produce three years of audited accounts. Virgin One has agreed to give me a loan, based on a letter from my accountant setting out my first-year turnover. The downside is the pounds 2,800 penalty I have to pay Bristol & West. Even if you are a "standard" borrower at the moment, it's worth checking how flexible the lender is.

As a last resort you could take a self-certified mortgage, which requires details but no proof of income. However, you may have to slap down a large deposit and pay a punishing interest rate. It might be better to wait until your first-year accounts are ready.

Ask also what your lender can do for you. If your income changes with the seasons, find a flexible mortgage that allows you to raise or reduce payments at short notice, or even take a payment holiday.

Older borrowers

The typical mortgage lasts 25 years. If you need one in your fifties you may still be paying it off well into retirement. You could take a 10 or 15-year term but the monthly repayments, and therefore the risk to the lender, will be much higher. All of this makes high-street lenders edgy.

Joyce Phillips was 66 when she needed a mortgage. Her husband had died and she decided to move her daughter's family into her Buckingham home and build herself an annex, but the banks would not lend her money because of her age. Her income was sufficient and, if she died, the debt would have passed to her next of kin, but because the major banks make their money from volume, they can dismiss marginal borrowers. The business lost is minuscule compared to their profits from standard mortgage-lending. Mrs Phillips was granted a mortgage through Kensington Mortgages, which specialises in mortgage-lending to supposedly difficult borrowers.

Her problem is not unique. Couples divorcing in middle age often find getting a mortgage difficult through mainstream channels, as do those who want to spend the surplus income that becomes available after the kids leave home. You could buy jointly with a younger person or alternatively you could approach a specialist lender.

Older borrowers will need to supply information on their earned income and pension provision if their expect to continue meeting payments after retirement. A good credit rating will help keep the interest rate down, while a track record of keeping up regular mortgage payments will also help. You may be able to negotiate a lower rate if you have a large deposit, typically 25 per cent. Some specialist lenders lend no more than 85 per cent of your property's value, sometimes less.

Bad credit rating

A previous history of debt could prompt the credit rating computer to spit your application out in disgust. However, many lenders may take a less dogmatic view. Even if you have a County Court Judgement (CCJ) against you, a mainstream lender may give you a mortgage if it has been cleared and was for less than, say, pounds 500.

Bankruptcy may also be forgiven if it happened four or five years ago and you've kept your nose clean since. In both cases present all the facts and explain why you ran into problems. If you withhold information that later comes to light, an offer could be withdrawn.

A history of repossession is a different matter. If you have ever defaulted on a mortgage, head for a specialist lender, put your case to them and keep your fingers crossed.

Low earners

Low earners will be limited in the amount they can borrow. Buying with a partner will help, says Ms Gee, otherwise some lenders will loan up to four times income, or a local housing association may allow you to buy a 50 per cent holding in a home. "You have to be realistic. If you cannot find a lender, ask yourself whether you can really afford to buy."

No deposit

You may have no deposit to put towards the house and require a 100 per cent mortgage. "These are available, particularly for professionals, but you will suffer a higher interest rate and charges," says financial adviser Philippa Gee of Gee & Company. "Choose one where redemption penalties end after a short period so you can switch to a cheaper deal once you have saved enough for a deposit."

Ms Gee advises approaching your existing bank first if you have a good long-term relationship with them, or a specialist mortgage broker if they say no.

Long-term illness

Many people with life-threatening illnesses assume they won't get a mortgage, but this is not always so, says Stephen Deutz, solicitor with the Terrence Higgins Trust. "I often receive calls from people who are HIV positive. What you cannot get is life insurance, which means you can't get an endowment mortgage. However, you can get a repayment mortgage without having to take out life insurance," he says.

Problem properties

Flats in blocks more than six storeys high or mainly council-owned may deter lenders, as may those above takeaways. You could face problems with a leasehold property where the lease doesn't have long to run. Shop around.

Rural purchasers can face problems, for example if their property is near a disused mineshaft or has a thatched roof. Local building societies may respond more positively to lending on such properties than national ones.

Whatever problems you face, you will get a mortgage far more easily by preparing a plan with details of the property, what you hope to achieve and how you plan to pay for it. Non-standard borrowers need not despair. There are millions like you, and getting a loan will prove increasingly straightforward. One day, even mainstream lenders may help out.

The following lenders may be able to help out non-standard borrowers: Kensington Mortgages (0800 111020).

The Money Store (0800 731 9494).

Paragon (0121 712 2345). Southern Pacific (0141 552 3636).