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Get Residential Mortgage While Self-Employed

mortgages for self employed
In: Business

Today, with the expansion of self-employment activities and the emergence of self-igniting people in various industries, the demand for self-employed mortgages has also increased. Likewise, lenders offer a variety of mortgage programs. Contractor mortgages, professional mortgages, remortgage services, mortgages for first-time buyers, large mortgages and mortgages for self employed are among the residential mortgages lenders provide. But self-employed face many complexities and problems in obtaining mortgages.

  • How can self-employed get mortgages?
  • Is it difficult for self-employed to get mortgages?
  • How do self-employed qualify for a mortgage?
  • How long will it take for people to get their mortgages?
  • What kind of lenders are willing to offer self-employed mortgages?

These are among the questions asked for self-employed in the first stage. These are the questions that come to the minds of self-employed. Asking questions shows the complexity of obtaining a mortgages for self-employed.

In this article, we seek to answer these questions and explain how to assess the affordability of self-employed and grant mortgages to self-employed. However, it should be noted that different lenders, depending on different market conditions, consider different conditions for self-employed applicants. But in general, the concepts, functions and processes of self-employed mortgages have a specific state.

Is it difficult for self-employed to get mortgages?

This is a question that many self-employed ask themselves before applying for a mortgage. But the important thing is that lenders are always looking to reduce their risks. For lenders, self-employees are identified as high-risk customers. Therefore, self-employed must provide evidence to lenders that they are at low risk. They need to provide evidence of a consistent and substantial income to lenders to reduce their perception of granting mortgages to them. However, it should be noted that the Covid-19 crisis has made lenders’ standards more difficult, and consequently, it has made it more difficult in getting mortgages for self employed.

How do self-employed qualify for a mortgage?

In general, self-employed should take the following steps to obtain a mortgage.

  1. Work history –

    Lenders are always concerned about the timely repayment of their mortgage instalments. They want to see if the self-employed income is high enough to pay the mortgage instalments. To this end, self-employed must provide proof of timely payment of their debts to lenders.

  2. Sustainability –

    Self-employment is another important issue for lenders. Although lenders review each client’s business profile individually and assess their affordability in separate files, self-employed are required to complete a list of their contracts with a CV to lenders. Many lenders claim the income of self-employed last two years to assess their affordability. For example, self-employed with more than two years of experience will have more options, and lenders will be willing to offer reasonable rates and conditions. But for, self-employed with a year or less of work experience, they should do more research in the mortgage market and spend more time and energy finding an appropriate lender.

  3. Improve credit score –

    Lenders first assess the self-employed credit score to assess their credit risk. Therefore, self-employed, before submitting their application, it is better to have a thorough evaluation of the negative and positive points in their credit score and take the necessary actions to improve their credit score.

  4. Debt-to-income ratio reduction –

    Another important indicator for lenders is the debt-to-income ratio. If this ratio is less than the lenders’ amount, the borrowers cannot pay their expenses on time and consequently cannot pay their mortgage instalments. In this regard, the solution for self-employed is to pay off previous debts and find ways to increase income. Reducing the debt-to-income ratio increases the financial capacity of self-employed and thus increases their chances of getting mortgages.

  5. Paying more deposits –

    Paying a significant deposit gives the lender reassurance because it indicates that the borrower has the appropriate financial capacity and sufficient income to repay the mortgage. Also, paying a significant deposit reduces the lender’s risk, and therefore the lender sets more reasonable rates and conditions for the borrowers.

  6. Provide adequate documentation –

    In addition to filling the mortgage application forms, lenders require borrowers to provide personal and business financial information. Therefore, by preparing and collecting these documents, the lender will have a better evaluation of the business and financial performance of the applicants. Identity information, tax invoices paid, personal and business bank accounts, asset statements such as pensions, investments, business licenses, list of personal and business debts and expenses, list of other assets such as social security or disability insurance is one of the required documents. Providing these documents to lenders can provide a more accurate view of borrowers’ assets. The self-employed must ensure that these documents are up-to-date and properly organised before applying.

The importance of using SWG Mortgage advisors

This article is a general guide, but the key to success when applying for a self-employed mortgage is getting high-quality and personalised advice from professionals with a comprehensive understanding of the market. SWG Mortgage advisors specialise in finding the right products for self-employed, no matter how they do their business, and can therefore help make their application successful. SWG Mortgage specialist advisors with extensive experience in this complex industry can help self-employed.

You can be a sole trader, director of a limited company, member of a partnership, or a contractor to be classified as self-employed. But the SWG Mortgage team of specialist advisors understands contractors’ financial and business conditions and other self-employed. SWG Mortgage advisors can help you determine your eligibility for a mortgage, estimate your mortgage amount, and provide you with the right options from the best lenders.

If you are not ready to submit a request in advance, SWG Mortgage advisors can assist you in the process of arranging everything. SWG Mortgage advisors’ full market access to lenders ensures that they identify the right mortgages for you.


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