Home Business Insights & Advice How business owners can increase their chances of getting a mortgage

How business owners can increase their chances of getting a mortgage

by John Saunders
25th Nov 19 10:35 am

One of the greatest challenges business owners often face is getting enough capital to bring their ideas and dreams to fruition. After jumping past this hurdle hopefully, the business starts growing, the next thing is to plan to own a property like a piece of land or a home.

Depending on where you live, it might be hard to obtain a mortgage to use to buy yourself a landed property or it could be easy. The point of it all is to let the lenders see how much you are earning and how the amount you’re capable of paying back.

This way, the lenders can confidently lend you money knowing that you earn enough money to be able to pay them back. You can keep your finances clean and tidy, get an accountant, and so many more tips that we will address in this article.

People who are not self-employed have an easier time securing a mortgage. Why is this, you will ask. It’s because they have proof of their income and their employers issue them statements of salary payments.

So, they can just present all these to lenders as proof. But for those who are self-employed, they never have to issue a statement of payment to themselves since they own the business.

Therefore, there is little stable proof to present to the mortgage lenders or mortgage companies hence their probability of having their loans being approved is very low. Below are four tips business owners can use to increase their chances of getting a Director Mortgage.

1. Keep your finances organised

You can do this by getting an accountant to sort your finances. Maybe you didn’t have all your financial records in one place beforehand, an accountant can help you to sort them all out.

This will help the lenders to see all your financial records and know from there how much to borrow you. But if your record is scanty and hard to navigate through, it becomes a problem.

You should not rely on the accountant to sort things through though. Remember that you are the one to present the records to the lender, not the accountant.

The lenders might not be clear about certain parts of the record you presented and might need you to clarify those things. This means that you need to understand your figures very well.

2. Get your SA302 ready

This is a form that shows the breakdown of your tax payments. This might not be relevant in locations outside of America and Europe, so be sure to get the relevant tax documents to show your tax payment breakdown to the lenders or mortgage companies.

They usually request for this document, so just get it ready.

3. Get your proof of income ready

Some lenders will ask for certified account statements that have been signed by a registered accountant, while other lenders will be content with a combination of bank statements, balance sheets, and profit-and-loss statements.

So, be sure to know what the lenders are looking out to see. Whatever statements you are presenting has to be understood well by you. If you don’t understand it, you can’t expect the mortgage company to understand it either.

4. Make sure you have been self-employed for a reasonable amount of time

If you have only been self-employed for six months, one year or two years even, it might be tough to convince the mortgage companies to help you out.

You should make sure you have been self-employed for at least three years and above, and your bank statements should reflect this fact. Your account must be up-to-date and it’s imperative to maintain a healthy cash flow within that period for you to be taken seriously.

You should also be able to provide a track record of regular works you have done in the past and works you will do in the future as well.

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