Trying to get a self-employed mortgage can be a bit of an ordeal. Many people are turned down for self-employed mortgages simply because they don’t meet the lender’s requirements. Don’t let that stop you though. By using a self-employed mortgage calculator, you’ll be able to find out what you need to do in order to qualify for a mortgage. Here are some tips for self-employed mortgage applicants:
Use a mortgage calculator
Many websites on the Internet will provide a free self-employed mortgage calculator that you can use to calculate your monthly payment and monthly interest costs. Using a calculator is a great way to learn more about mortgages before you make your final decision. Even if you’re not yet sure if you’re eligible for this type of mortgage, taking advantage of free calculators will help you learn more so you’ll know whether or not this type of mortgage is right for you.
Have your current financial information handy
Before you submit your mortgage application, lenders will want to have a good idea of your financial situation. Lenders will want to know how much money you make on a daily basis, your total debts, and your annual income. They will also want to know your credit rating and if it’s good or bad. If you have a bad credit rating, your self-employed mortgage lender may automatically deny your application, which means you’ll have to pay more money for the mortgage.
Be good on a down payment
Lenders like to see a decent amount of down payment when you apply for a mortgage. A good down payment is a proof that you are serious about paying back the loan. Many lenders will require up to 25% of the loan amount as a deposit. When you apply for your mortgage calculator, enter in the information required for the deposit and you’ll get an idea of how much you should ask for.
Be ready with bank statements
Lenders need to know where their money is going. They won’t give you any money if you can’t provide them with bank statements proving your money management habits. Self-employed mortgage lenders like to see at least one year of bank statements showing you’ve made all your payments on time.
Include trading and other income
Lenders like to see evidence of what you’re doing with your money. If you work as a sole trader, for example, you have no employees and no office, so there’s no income. However, you might have investments and account transactions. You should include those in your mortgage so they’re easy to access.
Maintain current bank accounts
Maintain your current accounts in good standing by making sure they’re in good standing on your tax returns and you have a sufficient balance in them. If your bank statement shows you’re still paying off credit card debt, that means you haven’t been prompt with those accounts and have not been accessing them regularly enough to build up sufficient equity. Your mortgage lender will want to see that you have another account in good standing and that you use it regularly to fund your other financial obligations, such as your home.
Be honest with the lender
Lenders like to see that a borrower is straight with them and isn’t just trying to game the system. Failing to declare an income when you’re self-employed can negatively affect your mortgage repayments. Let your lender know exactly what you earn and how you spend it. Tell the truth, nothing more and nothing less.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.