So I’m self-employed and want to acquire my first home, is this possible? Yes, it most definitely is!
It might sound daunting and impossible, but don’t worry, we have created a list of tips for you to consider;
Are you really self-employed?
Before we make our way through this list, ensure that your employment status is actually ‘self-employed’. If you are a contractor or sub-contractor you might be able to get away with being seen as an employee by some lenders.
Is your financial information current and up to date?
Establish what taxable income level you need to apply for credit. When assessing a self-employed applicant’s eligibility for a home loan, lenders review your consistency of income. They want to see a level of steadiness that assures your ability to meet their minimum requirements.
Expect to produce your most recent two years’ worth of personal tax returns. If there is a large gap between taxable income for the two financial years, the lender will generally refer to the figures that relate to the lower of the two, regardless of whether that is the older statement.
Without adequate taxable income, most lenders will shy away from approving your home loan.
Understand the process
An important aspect to understand is that banks use a variety of methods of assessment for self-employed people.
Become aware of your business add-backs, these will help increase your ‘income position’ that a bank will use to determine if you can afford a loan.
What does your credit history look like?
Have you been terrible with paying your credit card bills? Well, it all counts towards your credit history. It is important for individuals who are self-employed to protect their credit rating. Implementing positive credit reporting in your organizational practice will prove to reflect more transparency to relevant stakeholders.
Okay, how do I find the best home loan and get it approved? Speak to a specialist at Sprint Finance of course! We can help you through the most difficult situation. Contact us today!