Self Employed MortgagesBy Caitlin in Mortgage
Everybody knows that acquiring a mortgage when you are self-employed is tough. And it’s tough for a variety of reasons: income isn’t secured, it isn’t steady and it isn’t guaranteed.
Still, that’s not to say that self-employed mortgages are impossible to obtain, because that wouldn’t be accurate. You can indeed get funded if you are self-employed, you’ll just need to meet specific criteria.
Let’s break this down.
Reality Check: Why Banks Don’t like Self-Employed Mortgages
The main reason why banks don’t like this type of mortgage is because banks hate risk. Lending to an individual with unsteady income is a risky move, and this is the main reason why banks don’t like these mortgages. If you are self-employed with steady interest or dividend income, for example, the story is a little bit different. In other words it’s not about being or not being self-employed, it’s really about having a steady source of income – and it doesn’t matter if it comes from labor or capital gains.
Generally speaking, these are the requirements for a self-employed mortgage. Note that cases vary individually.
You will need certain documents to provide proof of identity and meet other legal requirements. As an entrepreneur certain lenders require that your business be registered. Having copies of your tax returns, license and financial statements will make it easy for you to qualify for a mortgage loan even if you are self-employed.
Who lends to the self-employed?
The best example of a lender for self-employed mortgages is an unconventional lender, and the best example of that would be one like Home Trust.
Home Trust likes to cater to entrepreneurs and so they offer various self-employed programs. They also offer great programs to new immigrants and people with bad credit ratings or no credit history at all. Actually, they position themselves in the mortgage market as a bad credit mortgage lending institution.
In addition to Home Trust, there exists a small roster of financial institutions, credit unions and low-key private lenders that can assist you.
If the lenders aren’t taking you seriously, then arm yourself. Get a mortgage broker and continue on with your negotiations. The truth is that a mortgage broker is likely to understand the mortgage market a lot better than you, therefore, you should leverage his or her knowledge and use it to your advantage. After all, the service is usually free.