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It is undeniably difficult to acquire a mortgage for a freelancer. A lender requires salary and tax details of the mortgage application process, which the freelancer may find it difficult to provide. However, a freelancer may not find it an impossibility to acquire a suitable mortgage product. The following techniques can ease the application process and enhance the prospects of getting a loan.
Most lenders expect you to present two or three years of accounts. It is important that the accounts are recent. If the accounts are not current, you will have to present the SA302S (self- assessment tax form). It is worthwhile refreshing your accounts before the mortgage application process.
It is advisable to initiate the application process for a mortgage when your income is steady or on the rise. Low earnings in the first few months of your business may not discourage a lender. However, a fall in the income level just before applying for the loan may put him off.
A business entrepreneur may decide to accept a small pay package and keep most of the earnings as profits for the company. Though this is an efficient method for planning taxes, a lender might hesitate to grant a loan to an individual with a small salary. It is advisable to draw a sizeable salary prior to the application process for the mortgage.
Mortgage lenders view a freelancer favourably, if the individual has been working in the same field for some time. A lender may offer attractive loan packages to an individual with a record of accomplishment in a specific area of expertise. It is inadvisable to take up different lines of work.
A considerable deposit towards the price of the home enhances the chances of getting a mortgage loan with low interest rates. Restrict the loan to less than 75% of the worth of the home. A lender scrutinises the application process more closely, if you intend to borrow more than 75%. In addition, large deposits may procure lower interest rates and reduce monthly repayments considerably.
Lenders attach immense value to your credit report. Enhance your credit rating by settling all debts, paying bills on schedule and cancelling credit cards you do not need. Make sure that your name is on the electoral list.