Securing a mortgage when self employed
Applying for a self-employed mortgage can be daunting – but as long as you’re well prepared, hopefully you will manage to secure the right mortgage for your circumstances. It’s important to make sure your application is as bulletproof as can be, have your forms and deposit ready to go. Here are some expert tips on what to consider when applying for a mortgage if you’re self-employed:
Preparation is key
Requesting the required forms you need to prove your earnings can take several weeks so make sure you do this as soon as you know you want to purchase a property. Acquiring a mortgage when self-employed can be a little more complicated, so it’s worth taking the time to make sure everything is in order so that your application is complete. You will also need to prove the source of your deposit so if this is a gift from a family member it will need to be declared. Talk to a financial advisor or independent mortgage advisor to find out exactly what you need to get the ball rolling. It’s also worth getting advice when you’re considering a property purchase so that you can start to manage your accounts and any outstanding credit to your advantage.
Check your credit score
As soon as you decide to buy a property, check your credit score. This is what lenders use to determine if you are a reliable applicant for credit. To ensure your credit score is high, make sure you’re on the electoral roll, you haven’t applied for too much credit in the space of year (it’s advisable not to apply for more than three), your credit cards aren’t at their limit, you haven’t missed any payments and you avoid making the minimum payments. If you have a low credit score, talk to a mortgage advisor as it may be worth holding off until you can improve your score. There are mortgages available for those with a poor credit rating, but they can be very costly so it’s better to wait and build up your score.
Gather the documents you need
If your income goes up and down each month and changes from year to year, you will need to gather as much evidence of your overall income as you can. Lenders will look at your average profits and you may need to provide some evidence that you expect the upcoming year’s income to be on a par with previous years. You could gather evidence from employers, existing contracts and proof of new clients. Alternatively you will need to show that you have savings aside from your deposit to meet your repayments should you lose work.
Employ an accountant
A qualified accountant can prepare the accounts you need, and this is usually the preferred option from lenders. In fact, some lenders won’t even consider the accounts unless they have been signed off by a certified accountant. You may need up to three years of accounts and you will need to break down profits, expenses, dividends etc.
Get the right advice
By using an independent mortgage advisor, you can get the right advice on which mortgage you will be eligible for, as well as their requirements. A mortgage advisor can search the whole of the market and often have access to lenders that provide specialist mortgages.
If you are considering an Urban Union property, talk to us today and we can advise you on availability and costs.