How to Get a Mortgage if you’re Self-Employed
Since the financial crisis that struck in 2008, getting a mortgage has been a hard work. This is particularly true for the self-employed.
Years ago, getting a home loan wasn’t that difficult. In fact, even self-employed individuals, who could not provide evidence of their income, could acquire a loan from banks and other financial establishments easily. This process was known as self-certification, or self-cert mortgage. With this process, borrowers didn’t have to provide financial statements to prove their income and get their loan application approved; instead, they simply told the lenders how much they earned, and they would instantly get the amount they need.
Self-cert mortgage was originally designed for self-employed and business owners, but later grown largely to the point that it was even made available for a wide range of consumers. The abuse of the system has led to self-cert mortgages being referred as “liar loans”, and eventually resulted in them being banned. So now, self-certification no longer exists, making it harder – but not impossible – to get a home loan that you need.
What to do to get a mortgage?
If you’re a freelancer or self-employed, what you need in order to get your application approved these days is to provide proofs of your income to the mortgage lender you’re considering. One best way to do this is to file your income tax return. Most lenders are likely to look at the yearly accounts you’ve declared to the tax man, so make sure that you file your tax return regularly. Generally, the more accounts you can show to the lender, the better.
If you don’t have several evidences of income, don’t panic. Some lenders are still willing to consider your application, as long as you can provide enough records of your regular work or income source.
If you want to increase your chances of getting approved, you may also want to hire your own accountant. Most lenders prefer borrowers who have detailed account records and proposals prepared by an accountant. But be reminded that some lenders require accountants to be certified or chartered, so make sure to pick the right one when hiring.
Improving your credit rating is also a great strategy to boost your chances of getting a mortgage loan. So if you have any debts, including phone, electric, and credit card bills, pay them as soon as you can. If you’re running your own business, make sure that you also pay your business fees and debts on time. Remember that lenders don’t just check your personal credit rating, but also check your business credit rating, so ensure that all your credit reports are in good standing. It also best to double check all your credit reports in order to make sure that there aren’t any mistakes that can potentially ruin your chances of securing a home loan.