"When it comes to getting a self-employed mortgage, it's crucial to find a lender that understands your situation"
The team at www.onlinemortgageadvisor.co.uk have shared their insight on how to get a mortgage when you’re self-employed, from keeping up-to-date financial records to seeking professional advice.
Keep up-to-date financial records
When applying for a mortgage, maintaining up-to-date financial records is critical. You should keep a record of your business income and expenses, including bank statements, invoices, receipts and tax returns. Lenders are more likely to lend to those who have maintained proper records and can demonstrate their affordability. Getting into the habit of recording your financial transactions will make your life easier not just when it comes to getting a mortgage, but for all aspects of your business.
Maintain a good credit score
Credit scores are of utmost importance when it comes to getting a mortgage. A good credit score can be highly useful for ensuring you make a successful mortgage application. Regardless of whether you're self-employed or not, lenders will check your credit history to determine your reliability. It's also important to ensure that your details match across all documents, including your business name, address, and other contact details.
Stay debt-free
If you have outstanding debts or have defaulted on payments, lenders might view you as a risk, and this could harm your prospects of getting a mortgage. Therefore, it's important to stay debt-free by paying bills on time and settling bills as quickly as possible. If you have significant debts, consider consolidating them into a single payment plan to make the monthly payments more manageable.
Save as much deposit as possible
In general, the more significant your deposit, the better your chances of being approved for a mortgage. Lenders prefer borrowers who can put down a high deposit to demonstrate they have an investment in the property. The reason behind this is simple – if you have financial commitments and other outgoings that conflict with mortgage payments, the lender has security in a more substantial deposit. Typically, the minimum deposit required for a mortgage is 5-10%, but the more you can save the better.
Shop around for lenders
When it comes to getting a self-employed mortgage, it's crucial to find a lender that understands your situation. It's advisable to research several lenders and familiarise yourself with their product ranges. Make sure you explore all the options available, as different lenders have different criteria for approving applications. Some lenders will consider earnings over several years, while others will consider your recent income. That's why shopping around and exploring all options is vital.
Seek professional advice
If you're still struggling with securing a mortgage, then it's time to seek advice from professionals. A mortgage broker can help you navigate the complex lending landscape, locate providers that offer the best deals for self-employed individuals, and help you improve your chances of success. They can advise on the best deal to suit your budget and circumstances, as well as provide expert advice on how self-employed income can be represented.
Consider using a joint applicant
If you're concerned about your income being insufficient or if you haven't been self-employed for long, then you may want to consider using a joint applicant. This will help you increase your income and demonstrate to lenders that you are a lower risk. The joint applicant can be a partner, family member, or friend. You can also opt for a guarantor mortgage in which a third party guarantees the mortgage loan repayment in case of default.
