Being self-employed can bring in multiple benefits, but there are some consequences too, especially when you want to get a loan from a bank. Banks need to trust the individual to be able to provide a loan.
You want a home loan or wish to invest in other financial products, but it would require you to think through and plan everything. You want to buy a home, but lenders won’t see you as the ideal borrower. Why? There is no fixed income and your business could thrive or fail anytime.
Here’s a quick self-employed mortgage guide. You could get the money for the home, but it requires you to follow certain steps.
What do mortgage lenders look for?
Mortgage lenders are looking for the following things:
- Income stability: Is your income fixed? When a salaried person applies for a loan, the bank knows that they have the capability to pay a specific amount every month. In this case, you can show your six-month income or your daily pay rate. The lenders will multiply it and find out your financial standing.
- The nature and location of your self-employment: Does your business have risks? You could get unemployed at some point; thus, you have to prove that your self-employed nature of work is stable and pays you regularly. Lenders take the risk by offering you money, they need to know that you are capable of paying it back.
- The strength of your business: Now, we are talking about the financial strength of your business. Can your business survive during uncertainties like COVID or any other emergency situation? Lenders need to know that your business is future-proof and you can pay back the amount well in time.
- The ability to generate a stable income: Your lender wishes to know if the income is regular and stable. This way you will be able to pay back without a hassle.
- Work history – The lenders need to check your work history. Have you been employed long enough to pay the loan amount? Calculating risks and checking the capability of the borrower are very important.
You can get in touch with a private mortgage lender and let them know about your financial standing. Direct contact might cause problems, so it is best to connect with a mortgage broker.
You could contact Pret Hypothecaire Nord Est in this case. They will help in getting in touch with the right private lenders.