Becoming your own boss and being self-employed as a successful blogger has its benefits and its challenges, one of which is that it can make it more difficult for you to get a mortgage.
Although you may consider your business to be doing well, tax-write offs reduce the amount of income that a mortgage underwriter can consider, not to mention it can be difficult to prove a regular and stable income.
Never-the-less, getting a mortgage when self-employed is possible, here’s how.
Consider your lender
Not all mortgage lenders are created equal with some, such as Altrua Financial specializing in providing low mortgage rates to those in self-employment.
Before jumping into a mortgage appraisal process with any lender, carefully consider if they are right for your employment situation, do they have information for self-employed people on their website?
Do they have a reputation within the self-employment industry for helping the self-employed to get on the property ladder?
Know what your lender will be looking for
It’s much easier to pass a test if you know what the examiner is looking for. When it comes to mortgage lenders, they will be looking at the following:
Out of these five points, the two key ones are the stability and consistency of your income.
Typically, lenders will use at least two years of your business history to determine the consistency and stability of your income, though it is possible to gain a mortgage with just one year of records if you are newly self-employed.
Things you can do to help your chances
Now you know the key things that a mortgage lender will be looking for, you can begin to work on strengthening your answers.
When it comes to the two key factors, stability and consistency, this can be demonstrated most effectively by being in self-employment for more than two years in which time you have received a steady income or a roughly similar amount.
Remember that expenses that cause tax deductions can negatively harm your business, so if you have been working to try and remain tax-neutral, then it may be time to start showing a more healthy yearly profit.
What if you get rejected?
Try not to be disheartened if your first mortgage application is rejected. It is much harder to get a mortgage as a self-employed individual, but this doesn’t mean that you should give up.
Apply again with a different lender and if you have been self-employed for less than two years then ask them to use different approval software such as Loan Prospector.
Just because one lender does not see you as a safe bet, does not mean that it will be the case for the next.
So there you have it – if you’re self-employed and worried about a mortgage then you now know what to do in order to make yourself an attractive candidate – good luck!