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How can self-employed people get mortgages?

2020-03-02
One of the questions we hear most often in our business is “How can self-employed people get mortgages?” 
 
We work with a number of self-employed professionals every month. We guide them through the mortgage process and help them secure mortgages to purchase the homes of their dreams. 
 
Therefore, we can say with authority that self-employed professionals do qualify for mortgages in Ireland. However, the key to a successful mortgage application is preparation.

We show you how in this post.

Make your self-employment mortgage application stand out 


 
Whether you are in the market for a first time buyer mortgage, a switching mortgage or you’re wishing to trade up to a bigger house, there are some additional pieces of paperwork you need to provide in your self-employment mortgage application.
 
Proof of identity documents for each person
 
We ask that each person applying for the mortgage confirms their identity. If you’re self-employed and applying for a mortgage on your own, then just your own passport or driver’s license is needed. If you’re applying with a spouse or partner, the both of you need to provide identity documents.
 
Proof of your current address is also needed.
 
Printed bank statements and recent utility bills both satisfy proof of your current address requirements. If you’re renting, your current lease will also work as proof of address.


Financial statements for to prove your self-employment status


If you haven’t already, it’s time to get friendly with your accountant!


That’s because you’ll need three years of verified business accounts. Newly self-employed people will need to adhere to this period of time too, meaning that a wait could be in order.


Lenders will also want to see that you can produce three years of Revenue Notices of Assessment. In addition, you’ll need to provide confirmation of your tax clearance.


It’s also advised to take out income protection cover to prove that you’re willing to protect your self-employed income. 


If you have any other income over and above the income you earn from your business, it’s imperative to declare that on your tax returns. It’s also helpful information to share on your mortgage application as it could help you secure a bigger mortgage as the lender would be reassured that you can afford it.


The importance of bank statements
 

 You need to provide at least 12 months worth of bank statements for each and every bank account held in your name. This is true for your business bank accounts too. 
 
 Use the time while you’re preparing your self-employment mortgage application to ensure that your accounts are tidy. This means keeping your personal and professional expenditure separately.
 
 Mini statements from an ATM don’t suffice. Order proper printed statements from your bank in plenty of time, or ensure that you can print .pdf bank statements from your account at home.
 
 The importance of regular savings


Being able to demonstrate a regular savings habit is still one of the strongest ways to ensure that your mortgage application is met with success. This is true no matter whether you are self-employed or work in a full-time permanent position.
 
 Even with a large deposit, lenders will want to see that you spend responsibly and that you save regularly. 
 
 



Clear personal debt as quickly as possible


 
 It’s in your interest to clear any personal debt that you may have as quickly as possible. Credit card balance, hire purchase contracts and loans don’t put you in the best light with lenders.
 
 If it’s not possible to clear all of your debt quickly, clear as much as possible. Then make sure that you are servicing your debt as you should. You don’t want late payments showing up on your repayment record.


While lenders may exercise some compassion towards you carrying a loan repayment every month, they won’t feel the same way towards a credit card balance. 


Pay off any debt you owe on your credit card as quickly as possible. If you’re carrying a credit card balance month to month, lenders will interpret this as an inability to live within your means.


Contact us with any questions you may have as a self-employed person looking to begin your mortgage journey. Our team would be delighted to chat and help you.


Claire Mason


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