Self-employed mortgages are obtained by people who have businesses of their own. This type of mortgage is already tough to obtain the income may not be what a normal employee may be able to guarantee. There may have been cases where your self-employed mortgage claim may have been denied. Here are the top five reasons this could have happened.
- Your income on paper isn’t attractive.
Many self-employed individuals tend to present lower figures of income that they originally receive for tax reasons. But this makes you eligible for lower self-employed mortgage plans than you are actually allowed to receive. This can be avoided by planning your mortgage and presenting an increased amount in the two years prior to the claim.
- Credit scores are important but so are debt ratios.
Every broker will tell you that you need a good credit score. While that is true, concentrating on your debt should also be a priority. Self-employed mortgages can be obtained easily if the lenders feel you can pay off your debts. However good your credit score, if you have too much debt when compared to your monthly income, you may have high chances of being rejected for the self-employed mortgage.
- Minimum or no credit history.
Paying for things in cash may seem like a good option at the time but it contributes to you having little to no credit history. Lenders and banks require credit history as proof that you can pay off your debt. They see this as a proof that you will be able to handle and repay your self-employed mortgage. Having no credit history will not make you seem reliable. Hence it is important to maintain a good credit history to maintain a good credit score.
- You don’t have proof of income to support your claims.
As a self-employed individual, you may have had the capacity to be paid in cash and would have shown fewer figures on your income tax forms. While this is beneficial to you, the case is opposite when it comes to claiming a mortgage. You need to have reliable proof of income to support your claim.
- Didn’t seek a broker.
It may seem like a trivial concern but actually having a professional on your side can help you secure your mortgage with ease and speed.