Most lenders would not think of taking such a risk. Self-employment is best described as the person owning about twenty to twenty-five per cent of a business. If you declare yourself as a self-employed person, you would have to present proof of income and have a bank account of about three years.
Qualifying for a Mortgage as a Self-Employed Person
Regardless of the fact that you do fit the criteria as set out above, you will find that it would be harder to qualify for a loan if you are self-employed. The requirements they would look at are:
- Your overall income: What this means is that your income might fit the income criteria different to the usual basic salary income.
- The way your tax is calculated and whether you have some equity tied up in the business as well.
- If you personal accounts are in order, this tow might sway the lender to decide in you favour.
These factors might be the way in which you have proof of income. As a result, the lender might deem suitable to offer you the mortgage. However, it is not always necessary to have proof of income, but whether you are able to borrow as much as you would like to.
Some Tips to ensure that you qualify
You need to make sure that you do the following:
- Keep your accounts up to date so that you have a clean record
- Use a chartered accountant or one that is certified.
- Work at making sure that your company has a steady or consistent income.
- If you do tie up some of your profits in the company, make sure that it is not too much.
- If possible, try to have a sizable deposit, which could increase your chances of getting a mortgage.
The Type of Mortgage you could get
The calculation of your monthly income is not always stable. It can differ drastically from one month to the next, and even from one year to the next. What would happen then is that the lender might look at your average income over three years.
You could, as a result, qualify for any of the number of mortgages that a normal employee would. The reason is also that many directors of companies would tie up their own profits in their business rather than take it as an income. This will be taken into consideration, and will determine the kind of mortgage for which you could qualify.