Securing a Mortgage When Self-Employed: A Practical Guide
Are you self-employed and looking to purchase a new home? This guide offers pragmatic advice on successfully securing a mortgage and getting approved. Learn key tips and tricks for a successful loan application.
Securing a Mortgage When Self-Employed: A Practical Guide
Are you a self-employed person looking to secure a mortgage? The process can be more complicated than when you're applying as a salaried employee, but it is possible! Read on for a practical guide to help you navigate the world of mortgage brokers, lenders, and other financial services necessary to obtain a self-employed mortgage.
Research Your Options
Before you even start the process, it's important to do your research. Most lenders will have different lending criteria and requirements for self-employed applicants, and you'll want to make sure you understand all the details before committing to any one lender. It's also a good idea to familiarize yourself with the different types of mortgages available and to get an idea of what different lenders are offering.
Review Your Credit Score
This step is important no matter who is applying for a mortgage, and it's even more important for self-employed applicants. Make sure you take a few minutes to review your credit score and confirm that the information reflected is accurate. This will give you an indication of how likely you are to be approved. Improving your credit score may involve clearing up any outstanding debts or improving your financial habits.
Get Your Documentation in Order
For self-employed applicants, lenders will typically require additional documentation such as tax returns, proof of income, and evidence of your self-employment. Make sure you have all of this documentation readily available so that you can send it to the lender quickly. This will improve your chances of being approved.
Find a Mortgage Broker
Navigating the mortgage process on your own can be tricky, which is why many people opt to work with a broker. A mortgage broker can help you compare different lenders and provide expert advice to ensure you get the best deal. They can also help you negotiate the terms and conditions of the loan and work with you to make sure all the paperwork is in order before you apply.
Consider Working with a Credit Unions
Credit unions are financial cooperatives owned by their members and are often willing to work with self-employed borrowers. They tend to offer more flexible lending criteria and be more understanding of self-employed income. This makes them a great option if you're having difficulty obtaining a loan from a traditional bank or lender.
Final Thoughts
Obtaining a self-employed mortgage can be a stressful process, but it doesn't have to be. By doing your research, reviewing your credit score, gathering the necessary documentation, and if needed, working with a mortgage broker or credit union, you can hopefully make the process run a bit more smoothly. Good luck!