In our previous article, we talked about how to get better mortgage rates during the home buying spree to ease the stress of future repayments.

This article will focus on what the someone are self-employed and sole traders need to be aware of when taking out a mortgage to buy a home.

Problem 1: High Interest Rates

If you’re self-employed or sole trader, you may pay higher interest rates on your mortgage.

Since lenders will tacitly assume that you are more at risk of repayment than long-term employees, you may need to demonstrate your repayment strength.

If you already have a good repayment history, this may net you relatively low interest on your loan.

Problem 2: Low Approval Rates

Mortgage approval rates are lower for self-employed people, based on the idea that traditionally employed people have more regular incomes.

To increase approval rates, this may require making sure you have a full range of licenses for added credibility.

This can also make your business more repayable if you want to register your business as a limited company.

To increase approval rates, be sure to keep your bank account debt as low as possible. Doing so will allow lenders to increase your assessment grade.

Problem 3: Documentary Proof

Detailed accounting records can be used as proof of income.

With a professional accounting team, you can clearly see your net income after paying taxes as proof of income.

This will demonstrate your ability to repay the mortgage and serve as a document that lenders approve.

All you need to do is make sure your monthly net income remains stable and you have sufficient cash flow.


Problem 4: How to Get a Mortgage

Getting a mortgage is indeed more challenging when you are self-employed or sole traders.

The only thing you need to pay attention to is that the proof of income and documents are clearly recorded.

Separating personal assets from business assets as much as possible will help you better manage your financial records.

A good credit rating and steady income can both improve your mortgage success rate.

Finally, if you are hesitant to apply for a mortgage loan, a team of professional accountants can provide you with sound advice based on extensive experience. Also, increase the approval rate and get you a more suitable interest rate.