Self-employed Remortgage Loans
Running your own business from home is a dream for a lot of people. Most turn to home-based businesses or freelancing to enjoy flexibility and the capacity to work on their own terms. Being your own boss is a wonderful feeling, but you may find yourself up against a wall when you try to get a self-employed remortgage loan.
Financial institutions are strict when it comes to requiring you to prove your financial income and other assets on your remortgage application. Being self-employed, your income may vary from month to month, or even week to week. It’s a daunting task to prove your financial worth, even if you’ve been self-employed for years.
Thankfully, refinancing has become easier for the self-employed over the last few years. You may discover something called a “no income verification loan.” This is a loan that required less documentation for the purpose of qualifying. If you have a decent credit score and a strong credit history, you should have no problems qualifying even if your income isn’t as easily documented.
Speaking with a mortgage broker can steer you in the right direction. Mortgages do exist for the self-employed and are generally more flexible in nature. They take your sporadic income into account and make room for irregular income. They also base your borrowing amount off of realistic earnings instead of the amount cited in any tax documentation.
Of course, being self-employed with erratic income, you won’t have as many remortgage loan choices as those who are employed. Your interest rates may also be higher than on standard loans. Another disadvantage is paying the mortgage broker fees if you decide to go that route, although it may work to your advantage in the end.
It will be easier to refinance if you have been self-employed for at least three years. Many financial institutions will look at three years’ worth of bank statements, audits, receipts and tax records. You may be required to submit a business plan. If you’re just starting out as a freelancer, you will have a more difficult time proving your financial ability. You can make up for this by proving how much equity you have built up since owning your home. If you have some time before you need to remortgage your home, consider hiring an accountant or professional bookkeeper to keep track of your business accounts. They can give you advice on what documents you need for self-employed refinancing.
If you have bad credit, this may not automatically be a problem. Depending on the lender, you may qualify for a special interest rate despite your past financial mistakes, although you can expect substantially higher interest rates. Remortgaging is about your current financial situation and assets, not your past and lending companies will take that into account.
Remember to do your homework. While a mortgage broker or other professional can help you find the right loan to consider, you want to do your own research first. Do a Moneysupermarket loan comparison and get an idea of how much interest you may be expected to pay. It’s also a good idea to determine your home’s equity, since this will factor greatly into your loan eligibility.
