Applying for a home loan when you are self-employed can be a difficult process, as banks are aware of the fact that the income of a self-employed person may fluctuate, making them a higher risk. If you are in the position of trying to apply for a home loan as a self-employed person, follow this home loan advice to make the process goes as smoothly as possible.
Show that you have a good credit score:
As a self-employed individual, you need to show that you are financially reliable and a good credit score will substantiate this. If you get approved, it will also help you get lower interest rates.
Offer a large down payment:
Putting down a large down payment will help the banks to see you as less of a risk as the higher your equity in the home, the less likely you are to walk away from it in times of financial strain.
Maintain a high emergency fund:
If you have an emergency fund with a substantial amount of money, it will show lenders that you will be able to make your payments no matter what- even if your business takes a turn for the worst.
Pay off debt:
If you have a large amount of debt which you are still trying to pay off, it won’t look so good for the home loan approval process. You should therefore do your best to pay off any credit cards or other loans before applying for your home loan. This could greatly increase your chances of getting approved.
Provide the necessary documentation:
To increase your chances of qualifying for a loan, you should be willing to provide all documentation regarding income from tax returns, balance sheets and more. This will show lenders that you have a good record of earning a stable income and that you are organized.
If you are in the process of applying for a home loan, don’t forget to use LikeMoney’s comparative platform to weigh up your options so that you stand the best chance of getting approved as soon as possible.
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