Applying For a Self-Employed Borrower Mortgage
There are many factors to consider when applying for a Self-Employed borrower mortgage. First, it's important to consider your declared income and supporting documents to verify the income sources. While qualifying based on self-employment income can be more tedious than traditional salaried employees, it is worth the effort to do this right because it can affect how much you can borrow and its mortgage interest rate. For instance, you need to be able to document any rental income, pension payments, or cash income.
Alternative lenders are less risk averse than traditional banks
When it comes to self-employed borrower mortgages, alternative mortgage lenders are much less risk averse than traditional banks. As a result, they tend to be more flexible in recognizing the declared income although they will still require supporting documents to verify the source of income.
When applying for a self-employed mortgage, make sure to read the requirements carefully. While you may have more documents to provide than a traditional borrower, lenders will appreciate borrowers who cooperate well in providing documentation for their due diligence process. Lenders will ask to look at your business entity, financial statement, tax return, and your personal credit history to determine if you are a high-risk borrower.
Whether you're self-employed or not, the mortgage underwriting process is similar. The lenders are looking to determine how much you can borrow without going into default, and whether you are categorized as a high-risk borrower based on their internal lending guidelines.
Work with a mortgage broker to simplify the process
An experienced mortgage broker will be able to assist you with listing out the document to prepare from the get-go. This way, you avoid the hassle of going back and forth with the lender in providing additional documents to get qualified.
Also, a mortgage broker can help you access the right alternative mortgage lender that will consider your mortgage application. This saves you the time from applying to multiple lenders and getting a decline.