In the past, getting a mortgage was relatively easy for self-employed people. However, recent changes on laws governing mortgages has made it more difficult for self-employed individuals to access mortgages even though they may have a higher median net worth than paid employees.
Below are some issues self-employed individuals might face when applying for a mortgage.
Lack of a monthly payslip
Paid employees are usually given pay slip each month by their employer, indicating how much the individual has earned for that month, the amount that has been deducted as tax, and any other charges. This will help the lender to determine how much they can repay each month and for how long.
Self-employed individuals don’t have a monthly pay slip that shows how much they are earning on a monthly basis. This can be a problem when applying for a mortgage.
Lack of lenders willing to give you a loan
Even though they might have an excellent credit score, the majority of lenders will be unable to provide a self-employed person with a mortgage. Banks and other mortgage lenders believe small self-owned businesses to be volatile. The closure of business would eliminate the earnings of a self-employed individual and render them unable to remit their monthly loan repayment.
In order to best avoid these pitfalls of applying for a mortgage if you’re self-employed, it’s best to hire an expert mortgage broker. Give Sky Financial – The Mortgage Centre a call and let’s get started today.