For borrowers who are self-employed or sole contractors, applying for home loan can be very challenging. Covid-19 also adds even more difficulty into the process. Here are some helpful tips we would like to share:
Hurdle one – Proof of Income?
One of the biggest challenges being self-employed is that annual business income might fluctuate. Most banks will generally require the last two years’ tax
returns and financial statements to confirm a stable income can be relied on to repay the mortgage.
Solution –
Working closely with a tax professional/accountant to get updated tax returns or financial statement is crucial, the key message is to prepare early.
Hurdle two – how has COVID impacted your business?
Covid has impacted many business owners’ income and financial stability. It can be difficult for a business owner to achieve the same level of income compared to previous years.
Solution –
It’s important to disclose full details about what’s going on in your business, it can be very helpful to have a brief business plan along with a business cash projection to provide more information to the bank, so that they can have confidence in the business.
Hurdle three – Being self-employed for less than 2 years
Solution –
Apart from banks, there are some non-bank lenders who are more flexible and will accept alternative methods to verify your business income, such as providing trading account bank statements or a letter from your accountant confirming your income etc.
We are here to help, get in touch with us today.
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