REQUIREMENTS FOR MORTGAGES FOR SELF EMPLOYED

2007-03-08 10:33:40

( Financial )



In the past self employed individuals find it hard to avail of mortgage from lenders who have biased towards people who are guaranteed regular income from employment. Currently, however, many lenders are providing mortgages for self employed.

Lenders look for a good track record of regular income of self employed individuals. They use it as basis to assess their ability to make regular payments on their loans. Those who are new to their area of business might face problems of accessing mortgages for self employed . Thus, start up businesses of single proprietors might find it hard getting approval for mortgages for self employed unless they have other sources of regular income to ensure lenders of their ability to regularly pay off their mortgages.

Individuals who are doing freelance work and short term contracts must show regular contracts with the same employer for lenders to ascertain the regularity of their incomes. The longer the contracts last or the regularly of its renewal the better for the lenders.

Amount of Loan for Mortgages for Self Employed

The amount of loan a self employed individual can borrow under mortgages for self employed depends on the value of his earnings and the value of the property he wants to mortgage. Further, the amount varies across lenders but usually it is three times than the amount of your yearly income.

Lenders usually compute the amount approved for mortgages for self employed individuals based on the amount of their regular expenses and financial circumstances. A couple with many children will not have a higher chance of getting a higher amount of mortgage. Lenders will consider the future expenses they will incur particularly on children's education and health care which will affect their mortgage repayment performance.

Proof of Income for Mortgages for Self Employed

Lenders usually ask for proof of income from self employed individuals prior to approval of mortgage applications. They usually request for a copy of the business’ audited financial statements. A larger deposit might be required by lenders in the absence of a three year audited financial statements.

Self employed mortgages are just like any type of mortgage wherein one must be careful to determine the amount of monthly loan payments that they can afford to pay.Else, they will face financial problems that can affect the operations of their business.


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