The quest to own your own home can be confusing, stressful and expensive. Getting a mortgage is often seen as one of the most difficult aspects.
A mortgage is best described as a form of loan that is specifically used by a borrower so that they can purchase real estate. Someone who takes out a mortgage (a borrower) signs an agreement to pay their lender back over time with added interest, usually in a series of regular monthly payments. The real estate that is purchased using the borrowed money is then used as collateral to secure the loan, meaning if you can’t keep up with your repayments, your house could be seized by your lender.
As a borrower, you need to meet a number of different requirements to access a mortgage. Your circumstances will influence what kind of mortgage you can get, as there are expectations such as specific credit scores or a high percentage down payment. When you apply for a mortgage, your financial history will go through rigorous screening to make sure you have the right income and habits to pay your loan back successfully.
Many people are under the impression that being self-employed can make it particularly difficult for you to get a loan, as meeting some of the aforementioned requirements can be a little more tricky. However, this guide aims to discuss whether it really is harder to get a mortgage while self-employed; so, read on to discover more.
Self-Employed vs Full-Time Salary
When you have a full-time salary, it can often seem far easier for you to achieve the mortgage that you desire. Having proof of a steady income is extremely advantageous when it comes to loan applications of any kind, as you can use this to show your lender that you have the necessary funds to pay your mortgage back on time each month for the foreseeable future.
Unfortunately, this is something that a self-employed person lacks. Even if you are receiving a good income, lenders know that this can be subject to change and may not be willing to take such a risk. It’s possible that a self-employed person could encounter an issue that sets them back from completing enough work, such as an injury. No one will be able to provide you with sick pay to cover your living costs when you are self-employed, so this is something that has to be factored into consideration.
In many cases, self-employed individuals need to have at least 2-3 years evidence of income certified by a registered accountant to start the application for a mortgage. This can be an extremely time consuming process, but it’s still achievable nonetheless.
It’s fair to say that it can be more time consuming and tedious for a self-employed individual to seek out a mortgage in comparison to those who are employed with a full time salary. However, it’s certainly not impossible, and you can still get a great mortgage as a self-employed person
Getting in touch with one of our expert mortgage advisers on 08000 835 209 to find out more about our brilliant self-employed mortgages today.