Being your own boss definitely comes with its perks – but those that are self-employed often find it hard to obtain a home loan (even with a steady income). Whether you’re looking to purchase a home or some equipment for your business, you may face challenges in the application process.
It’s important to know what will work for you and what lenders look for. Planning ahead for the application process will heighten your chances of being approved. Here are a few tips that may help you:
- Know your numbers
Sit down and determine what repayments you can actually afford without stretching your budget. Applying for a loan that fits into your budget is sensible and the application process will be a lot easier.
- Save up to offer a large deposit
We know what you’re thinking, ‘easier said than done!’. While it may delay your purchase, having a large deposit proves to your lender that you’re a low-risk client and sensible with your spending.
- Work on your business and personal credit score
A high credit score will enhance your chances of obtaining a loan. Lenders will run a credit check on you and your business, so it’s important to ensure all outstanding debts are paid.
- Be consistent with income and savings
When lenders assess your application, they will look for consistency of income. They want to see that business is steady and you’re maintaining a level of income that meets their minimum requirements.
- Make sure you’re well established
If you haven’t been self-employed for long, you may find it difficult to provide enough documentation to be eligible for a loan. While it is still possible, it certainly is easier if you follow the above steps and ensure you’re well established.
If you’re looking to obtain a loan now, the sooner you can get your 19/20 tax return done the better. The more information you can provide the better your chances are of securing a loan.
Each time you apply for a loan and you’re rejected, your credit score is affected – so getting your application right is crucial! Our team are highly experienced and can help guide you through your process and ensure your application goes to the right lender for your needs.
Get in touch so we can assist you and your business!