How to get a Mortgage if you’re a Freelancer
Mortgages are hard for even those with the most steady jobs and regular salaries to come by nowadays, so if you’re a self-employed or freelance worker it can be significantly harder. However, it doesn’t mean it’s impossible by any stretch of the imagination and there are plenty of ways you can make your mortgage successful.
One of the biggest issues that a lot of freelancers looking for a mortgage face are that many established and renowned financial institutions and their staff is not prepared for them. Many mainstream lenders are unfamiliar with self-employed people’s dealings and you may be outside of their terms. This means that it can be a lot harder to get a good deal.
The alternative is to use a broker who understands the issue and understands that you’re no more of a risk than most other workers. These people will look for the best deals to fit in with your circumstances and save you wasting a lot of time with high street lenders. So, consider this option when looking for a mortgage.
The deposit is not just an issue for freelancers; it’s one for anyone looking to get a mortgage. Gone are the days of 100 per cent mortgages; however it is still possible to get up to 90% and often a little more if you’re willing to look and bend on terms and interest rates. However, this said the better deals are reserved for those with 20 per cent of their deposit for the property. This places you in a far stronger condition as you’re considered a far lower risk than a self-employed person with a small deposit and little equity in the home.
Your credit history is a significant factor when it comes to getting a mortgage and the chances of getting one are far lower if you have a poor rating. So, performing actions that benefit your rating such as paying bills and credit cards back on time, adding your name to the electoral roll, keeping finances in check greatly improves the chances of improving your rating.
When you apply for a mortgage you’ll be asked for contracts and earnings – keeping these up to date and in check is a must and is vital to securing the loan. Lenders will need to see copies of this and clearly need to see the length of time the contract is set for and the rate of pay, as well as other details. This will all be included to support your application and show that you can pay off the loan without issues.
When the bank tells you how much they will lend you, it may be more than you imagined. However, don’t just jump on board and take out a loan you can’t afford. One of the biggest issues people had when the economic downturn came was that they’d taken out mortgages that were far beyond what they could afford. This left it hard to determine how long it can take to sell your home and this can cause significant financial issues. You need to be realistic about what you can borrow and have a clear understanding of what’s expected to be repaid each month. You should also take into account the chance that interest rates will rise, as this will cost you a significant amount extra too and though unforeseen at the moment, could happen in the future.
Getting a mortgage as a freelance contractor can be that little bit tougher, however with these tips you should be able to manage to do so and get a good deal when you do.