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5 Tips For Small Business Owners To Acquire A Home Loan

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:

5 Tips For Small Business Owners To Acquire A Home Loan

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.

Home keys

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.

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Lynne Huysamen

Mommy to a pigeon pair, blogger and online marketer. Lover of chocolate, good books and buckets of coffee.

3 Comments

  1. Wow! Just exactly what I need right now. I quit my job some months back and my mortgaged apartment is wearing out. Now as a small marketing business owner, everything has not been smooth sailing. This post just gave me insights and enlightened me, though it is small in quantity but the quality is crudely golden. I will abide by these tips in order to help me to scale through and be more qualified for loans.

    thank you so much for this post. I really appreciate. You’re a life saver.

  2. Thank you very much for this wonderful piece of information you have given. Owning a home could be quite difficult for small business owners because of lack of record of so many transactions that the business owner might have transacted hence the need to keep proper and accurate records when running a business.
    I have learnt a lot. Thank you very much for this great educating article.

  3. Your post is really informative and educative. Getting a loan in this current dispensation we live in is very imperative as there are always pressuring needs knocking on ones door daily. As a business owner one should have the privilege also to be able to apply for a home loan. Am glad your post as really dealt with the knowledge needed to make this possible. Initially i never knew all the full documents i would possibly need to stand a chance.Thanks so much for dropping this eye-opening post. I hope to follow your subsequent posts, so as not to miss any. Cheers!

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