If you are self-employed or have decided to pursue your dream as a self-employed person, it is often more difficult to get a mortgage than someone with a steady job and a steady income. Not that a permanent job guarantees the security that there used to be for obtaining a mortgage, but the chances are slightly higher. Fortunately, it is now a little easier to get a mortgage as a self-employed person; provided you can show that you have your affairs in order. Do you want to know how to arrange a mortgage self-employed? You can read it below.
Proof of income
Before applying for a mortgage, lenders must see that you have a job and therefore an income. With a regular job you can easily discuss this, but if you are self-employed, the process is a bit different. After all, you cannot hand over an annual statement. However, your chances may be good if you can demonstrate that your independent business is strong enough to survive for the time being. Lenders would therefore like to have insight into the income of the past two years or more. That means that your bookkeeping must be in order. Required documents are; personal tax returns, corporate tax returns and/or proof of income of other forms.
How is income calculated? To determine your income, the mortgage lender looks at the profit from your business before tax. The average profit of the last three years is used, unless the profit was lower in the last year than before. In that case, the profit over the past year counts as your maximum income. As a self-employed person you can also get a mortgage, even if you have only been active as a self-employed person for one year. For this purpose, your average income of the past three calendar years is taken into account.
Where is the best place to go for a mortgage?
There are of course different banks and lenders where you can go for a mortgage, all of which use different methods for providing it. You therefore have a greater chance at a bank that is specifically aimed at enterprising people such as NIBC Direct. Here your average income is determined based on annual figures and/or a forecast from an AA accountant. NIBC Direct wants to be able to serve the growing profession of self-employed entrepreneurs as well as possible and also offers mortgages if you have not had a business for three years. But if you want a mortgage with your partner and you are both independent, then at least one of you must have been working for at least three years to be eligible for a mortgage.
Other things to think about
* Get your finances in order so that your overall credit rating is good.
* Get well informed.
* Make sure you can make a down payment, although this isn't always necessary.
* Pay attention to the interest rate.
* Read the general terms and conditions carefully.
