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Self Employed Mortgages

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Self-employed mortgages are immensely useful for people who do not have a fixed or steady income. Before lending the money to an individual, lenders want an assurance that the individual will be able to return the money in time and with the money interest. Lenders see fixed income as a proof of the individual’s future stability.

The lenders till date avoided giving mortgages to self employed people. They wanted to ensure that you could give them a reliable income-proof. But for self-employed people, this is difficult since their incomes fluctuate. Nowadays with the changing employment scenario, with more and more people opting for self employment, the lenders have realized the growing potential of this segment and have introduced self employed mortgages.

To apply for self-employed mortgage, you should submit your accounts of 1-3 years. These accounts should be audited by a chartered or certified accountant. This will give your lender an idea of your income and help you get the mortgage. But if you are unable to submit audited accounts, you can self-certify your account. Here the lender will ask you for a down payment of at least 10% of the value of the home and levy higher interest.

To be eligible for a self-employed mortgage, you should be a part of a business for minimum 3 years. If you have just started out, it might be difficult for you to get your mortgage approved. The lenders want to see how employable you are. E.g. if you are an electrician, your chances of getting the mortgage are far higher than if you are a painter. This is because an electrician can be hired easily and will get regular work. If you are a contractor, you should be able to prove that you are on a renewable contract with the same employer for at least a year or two

If you are working for yourself and interested in buying a home or car, self-employed mortgage is a good way out for you. You need not worry about immediate rejection.

The advent of self-employed mortgages is a revolution. Many people are applying for voluntary retirement schemes (VRS) and starting their own businesses. Slowly, they direct complete attention and energy towards their own business and work. These self-employed people need encouragement and support. More importantly, they need money to survive and progress. Self-employed mortgages are a boon for such entrepreneurs.