The proud to be self-employed is quite big; it is awesome to be your own boss. However, self-employment sometimes creates concerns on some of your financial aspects in personal life. It is usually considered that applying for a mortgage as a self-employed is full of obstacles. As compared to salaried people, self-employed applicants are considered less reliable in their repayment capacity.
You know what, possibilities reside where impossibilities exist. After all, you have your own growth plans in personal life and a home is one of the most magnetic among them. Everyone wants to have a roof and no employment tag should become an obstacle in that.
There are few tips through which you can improve your chances of approval. Explore them here one by one.
1. Check your credit file
This is the first thing that you should do to check your possibilities on this aspect. The world knows how desperately lenders are interested in credit files of the applicants. From their history to current credit score, everything is important for them to take a look at the credit worthiness.
This creditworthiness tells about the repayment capacity of an individual, which is the prime concern of the lending companies. It is good to have a flawless financial behaviour, even if there are some flaws in the past, make sure your recent transactions look flawless. They should not show you unreliable in any case.
2. Get on the electoral roll
It is good to be in the government records. This is not only beneficial for the voting thing, in fact it also helps you have an improved credit score performance. Having your name on the electoral roll helps you get smooth approvals on short-term loans, phone contract, mortgage etc. Your electoral details show on your credit report and lenders find it easy to confirm your address and name. This paves way to easy acceptance of your applications to finance companies.
3. Stay away from high interest payday loans
Few lenders offer payday funding for the self-employed too. However, payday loans do not create a good image of your finances as this presents you as the one in financial difficulty. After all, this is why people take payday loans despite high interest rates. This also means you have big instalments to pay and the lenders do not like this to see in your records. The final thing is, DO NOT TAKE payday loans if you want to get approved for a mortgage as a self-employed.
4. Make an approach to flexible online lending
It may be difficult to wrestle with the decided policies of the mainstream lenders. They do not consider self-employed people much promising for a mortgage. Opposite to this, the online loan lenders have a different approach. They have nothing to do with your employment status. Their major concern is your capacity to repay a loan. If you are doing well on that part, getting mortgage for self-employed is not a big deal in the UK. You can find such loan companies easily on the internet. After all , they are online. For instance – Shine Mortgages, Post Office Mortgages are some of the names to bring in notice.
5. Do not use your credit cards to the maximum limits
Again this is about your financial efficiency. Using your credit cards to the maximum level creates a concern as the finance companies think you depend so much on your credit cards. Everyone knows how speedy the interest rates take a rise if there are any dues. Reaching to your maximum limits is never a good idea. Spend within the limits to play safe the mortgage approval game.
6. Arrange your deposit amount
Deposit amount is the biggest game changer. More you provide it, easier you find things on the mortgage approval. However, the minimum compulsion on this aspect is 5% but if you can manage to provide more, the benefit is all yours. Extend it up to 10, 12 or 15%, whatever maximum limit you can afford to manage. This is the only factor where you have no chances of failure. Just try to be efficient as much as possible.
7. Business accounts of last two to three years
The lenders need this to take out an average of your annual income. Make sure you have all the related documents ready. If you are new in the world of self-employment and have only one year account, make sure you do the due research. It is required to find out the lenders that consider the self-employed with only one year account. To be rational the previous situation is a better option. At least two to three years are good to have as your self-employed income.
The journey can be difficult but despite the ups and downs, the solution is possible. Do not stop exploring the more possibilities of the mortgage approval besides the above ones. Your home is a big and precious decision for which you cannot expect a few miles. A long distance is there to walk but if you take the right path, the destination too is sure to become visible FINALLY.
Description – Getting a mortgage with a self-employed tag can be difficult but not impossible. Follow the practical tips and reach to the desired goal without facing failure.