Whether you are self-employed or employed it makes no difference to the range of mortgage products that you are entitled to. Securing a mortgage when you are self-employed is not hard as many people think. If you own 25 per cent or more of a business, you can be classed as self-employed. Whether you are in a partnership or not, clients are treated the same as those who are sole traders. It is important to prove how much you earn when you apply for a mortgage because most lenders prefer to make sure you can afford the monthly payments. As soon as you decide that you want to apply for a mortgage you should start getting your accounts in order. Most lenders offer a wider range of mortgage deals for self-employed people. Here are helpful tips on how to get a mortgage approved when self-employed.
Hire an accountant
Hiring an accountant is one of the best ways to get your account in order. Getting your account prepared by a qualified accountant assures the lender that the figures are accurate. Most lenders prefer accounts that have been provided by an accountant to determine if a self-employed individual can qualify for a mortgage. It is crucial to make sure that your accountant is certified.
Lenders will look at your average profits when you apply for a mortgage. It is important to provide evidence especially if you’ve had high and lows of income and your earnings vary from year to year. For instance, if your cash flow declined at some point then the lender might ask you to explain why. If you can’t demonstrate to the lender that you are aware of what happened with the money in your business then they will be reluctant to approve a mortgage. On the other hand, you can provide proof to have a significant amount of savings which may help to get you approved for a self-employed mortgage.
Bank Statement and deposit
Bank statements can be used as proof of income and can also be used to determine your expenditure. If you apply for a mortgage with a bank you have a business account with, they may access the information and may not ask you to provide any statements. Proof of deposit is also required when applying for a mortgage. The lender will want to see evidence that you have the deposit, probably on a recent bank statement.
Good credit history
You should make sure you are going in with the best possible preparation when getting a mortgage. Sort out any unpaid debt ahead of applying and consider running a credit from a trusted service. This is because lenders will run a credit check on you and your business. Make sure that you check your credit file and do not let any credit cards reach their limit, also avoid making just minimum payments on credit cards.
Get expert help
It may be helpful to get a financial adviser who can help clear up exactly how to get a mortgage when self-employed. They can even advise on the best lenders to approach if you are really struggling or maybe you don’t have two to three years of accounts to submit or a complicated set of earnings and dividends. A mortgage broker might be able to guide you in the right direction by letting you know which lenders are good with self-employed borrowers. Several mortgage lenders offer products specifically designed for self-employed workers.