Being self-employed is great – you have freedom, the power to do as you please and can work the way you wish to work. However, one of the downsides to it is getting a mortgage.
Most lenders prefer to deal with people who have more security and regular salaries and income. However, it doesn’t mean you can’t get on the property ladder and there are plenty of things you can do to make your application successful.
A lot of the mainstream lenders have people that are not used to dealing with self-employed folk and so you fall outside of standard terms and conditions. This may mean they aren’t as patient with you as they would be with other people.
Brokers that understand the issues can make life a lot easier because they specialise in the area and understand that though you’re not employed in the traditional sense, doesn’t mean that you’re a risk. This allows you to get the best possible deal and one that suits your needs rather than feel that you are not worthy of a mortgage.
As with any mortgage the deposit is a big factor and one that can make a significant difference to the amount a bank will lend you. With a decent deposit you will get a lower rate than with a small one, though with Help to Buy it is possible to get mortgages at around the 5 per cent mark. However, the higher the percentage the better chance you have of obtaining a good deal and a lower rate – this will significantly lower the monthly repayments.
Your credit rating is very important when looking for a self-employed mortgage and so you will need to show that you can be proven to deal responsibly with money. This means keeping up with credit card and loan repayments and ensuring all your electoral roll details are up to date – another important factor when it comes to getting a good credit rating and one many people overlook when looking to purchase a home with a mortgage.
Providing the security of your earnings is essential when it comes to getting a mortgage and this is best proven with a contract. This means that keeping things up to date is very important and means that you will need a contract that states the rate of pay and the length of time when contracting. So, try and organise this before applying to get the best possible results when looking to purchase your new home.
Of course, it’s nice being offered a lot of money and then being able to afford a large mortgage, however you also have to be aware of its affordability. You need to take into account whether or not you can afford a mortgage, what your outgoings are and also how much you can put towards a mortgage reasonably each month. You don’t want to end up behind looking for the options to help sell your house fast to cover foreclosure. It also pays to take interest rate rises into account and to understand that things can happen and your earnings can fall. So, after considering this think how much you want to lend.
These tips are fantastic for people who work in the world of freelance and wish to get started on the property ladder.
About the Author: Cormac Reynolds is a writer and a freelancer and understands the issues with this only too well. He has written about it for numerous publications and sites.