Getting a home loan when you are employed is a relatively simple process, however if you are wanting financial assistance to buy a home if you are a freelancer or the owner of a small business it can become more complicated.
To make it easier for you to get self employed loans to buy yourself a home these are the steps that are suggested:
Get Your Paperwork In Order
The paperwork that you will need to submit to acquire a home loan may be differ according to the bank you approach and the country you are in. It is suggested that you have everything you may possibly need ready so that you can hand in any paperwork that is requested immediately without having to search or compile any documents.
Here are the documents that you may be required to submit:
- Comparative financial statements for the last 2 trading years
- Personal income confirmation from your auditor
- Signed management accounts that are up to date if your financials are more than 6 months old
- 12 month cash flow forecast
- Assets and liabilities personal statement
- 12 months bank statements for your personal and business accounts
- Latest confirmation letter from the tax authorities of your country that your tax affairs are up to date and in order
- The identity documents or social security cards of all the members, directors or trustees of your business
Tax and Financial Records
It is essential that you will be able to prove that you are financially able to purchase a property. This means that you will need to ensure that all your financial obligations, including your taxes, have been met and that you have enough income to afford a property.
Banks like to see consistent income as well as enough disposable income or regular savings in order to afford a property purchase.
Improve Your Credit Worthiness
The first thing that any bank will do when you apply for a home loan is a credit check. Run a credit check yourself first to see if there is anything that may prevent you from getting a home loan approved.
It is important to prove that you can prove that you can manage your finances. It can help to take out a credit card and to open some accounts with some stores to show that you can manage credit responsibly.
If you do have a judgement against your name get some expert advice on how to get it removed.
Keep Your Business and Personal Expenses Separate
It is important for a bank to clearly see which expenses are personal and which are business. It is essential for your bank to be able to see what net profits, company expenses and owner’s taxable drawings.
Make sure to draw a salary than to book personal expenses to your business account. Ensure that you don’t inflate your salary when applying for a home loan.
Get Yourself Pre-Qualified
If you get yourself pre-qualified for a home loan it means that your income, expenses and credit record have all been checked already so that you can put an offer in on a property confidently, knowing what your budget is for a home and with the assurance that your credit record is good.
Save A Deposit
Saving money towards a deposit will mean that the loan you apply for will be less and it also shows the bank that you are less of a risk since you are showing you are financially responsible and have some funds already available to put down towards your home.