5 Tips For Getting A Mortgage If You’re Self-Employed

Meanwhile, there’s no such thing as self-employed mortgage or mortgage rates, people working for themselves often suffer from the misconception that they will have trouble getting approved for a mortgage. The fact is that a self-employed individual isn’t more or less likely to get approved! As long as you have the proper documents ready as well as a steady income stream, you’re already halfway to getting a loan. Considering the loan from the point-of-view of the lender can sometimes help because it makes borrowers realize that what lenders want above all else is repayment. This professional mortgage broker Sheffield can help you get approve. If you give a mortgage lender what they’re looking for, chances are that you will get what you need. Below are a few tips to get you started:

1. Know What Types Of Income Are Included

You’re classed as a self-employed individual if you own 20% or more shares in a business. If this is indeed the case for you, how your business is set up will determine the type of income lenders will take into account.

For example, a limited company will require you, the borrower, to disclose both your salary and dividends dating back two years. In some instances, lenders may also consider retaining profit if your business hasn’t made much income.

Partnership or sole trader companies will need to have their taxes from the past two years included as well. However, the net profit is split between your share and that of everyone else’s.

2. Make Sure Your Accounts Are Updated

You should ensure that all of your accounts are up-to-date as most lenders won’t accept anything older than 12 to 18 months. This means that you need to have an accountant handy to help you crunch figures and get your numbers in order.

3. Income For At Least Two Years

Mortgage lenders are more likely to grant an approval if you can provide accounts for the past two years. Some lenders may even go as far as requiring proof of three years! If you only have proof of income for the past year, that will narrow down your pool of options and may also mean having to put down a 20% deposit.

It’s always recommended that you directly work with a mortgage adviser because they can help you find a lender willing to work with what you have. Additionally, from finding a lender that’s willing to take only a year of accounts, an adviser can also help to ensure that you get access to competitive rates and aren’t cheated due to your circumstances.

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4. Hire The Perfect Accountant

Mortgage lenders aren’t willing to accept proof of your accounts from under-qualified or non-certified accountants. They have fairly stringent guidelines about the types of certifications that the accountant needs to have in order to have their documents taken into consideration for your loan request. Some of these more commonly sought after qualifications include:

• ACA
• CA
• FCA
• FCCA
• ACCA
• FAPA
• AAPA
• FCMA
• FMAAT
• MAAT
• FAIA
• AFA
• FFA

If your business is already employing an accountant on a regular basis, it’s important to check out their website or directly ask them whether they are certified or chartered by any one of the above qualifications. Otherwise, this will hinder your ability to turn in the required paperwork for the mortgage loan application.

5. Check Your Own Credit History

Mortgage lenders will always check your credit history when considering your application. Make sure that your history accurately reflects that you pay off your debts in full and on time. Any errors on your report or negative marks will raise doubt in the mind of the lender about your ability to repay the mortgage. Of course, there may be instances where your less-than-stellar credit is an accurate reflection of your past mistakes. Having a lower credit score doesn’t automatically eliminate your chances of approval, but it can certainly be harder to find a lender willing to overlook these red flags. If you do see anything of concern or an item that was falsely reported, make sure to work together with the credit reporting bureau to get it sorted out. Even repaying a small amount of debt on your credit report can make a world of difference when applying for a mortgage.

Apart from potentially being denied access to a mortgage loan, not repaying your debt may mean higher interest rates in an already tough economy. If this is the situation you find yourself in, it’s best to wait in order to improve your credit.

Being self-employed doesn’t mean that you’re less likely to get approved for the right mortgage loan. However, an independent mortgage broker and a solid accountant can make a world of difference in getting you approved. It’s important that you have the right documentation handy and work directly with your lender to provide all the proof they require of your ability to repay the loan. Bear in mind, the more prepared you are, the easier things will go for you!