A mortgage lender will, basically, look for two things before approving a mortgage. Two questions will be prominent: first, is the person able to pay the mortgage as stipulated in the contract, and on time; and secondly, is the person reliable enough to do so?
In essence, regardless of who you are and what your conditions may be, those are the two things you have to prove when applying for a mortgage. Unfortunately, when you are self-employed or run your own business, the odds are stacked against you somehow – simply because there is more risk and a fluctuating income associated with that professional choice. Luckily, there are some things you can do. Here is a list of ways you can enhance your chances of mortgage approval if you are self-employed.
Hints and tips from the experts
You have your own reasons for having a certain structure – as a businessperson, you implement what’s best for your enterprise, after all. However, you may want to consider the following tips of the experts when it comes to mortgages, such as an Open Vision Finance mortgage broker Bristol:
Make sure your accountant is certified or chartered.
Talk to your accountant and see if your documents can be adjusted to conform to the SA302s – which mortgage lenders generally prefer.
Keep your accounts up to date at all times; your records should be no more than 18 months old for mortgaging purposes.
It’s tricky, but if at all possible, have the books reflect your profits to be consistent and increasing. Of course, this is only the ideal scenario – make sure you’re honest and consistent in your accounting and bookkeeping above all else.
As with any kind of mortgage (whether you’re an entrepreneur or freelancer, or an employee), the higher the deposit you can put down yourself, the better your chances of approval will be. Furthermore, you’ll also get better interest rate options.
Furthermore, get your credit score as high as possible. Do this above all – before applying for a mortgage.
Less than two years of records?
If you don’t have at least two years’ worth of records, you may still be able to get a mortgage, though your chances are lower. It will depend on your savings and your business prospects.
The truth is that it’s never easy to get a mortgage – simply because it is, for the mortgage lender, a risky venture and as they consider it an investment, they want to make sure they get their returns. On the other hand, since more and more people are starting their own businesses and more and more entrepreneurs are entering the economic playground, mortgage lenders are sure to ease their requirements; it’s positive news to watch out for.
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