How to Acquire (and Manage) a Mortgage if You Are Self-Employed – Part 1
Ever since the economic crisis of a few years ago, personal loans and mortgage lenders have tightened the pre-requisites for granting mortgages and personal loans all across the board. Nowadays though, ever since the traditional workforce has started to increasingly move away from the conventional working hours of 9-to-5, self-employed people has increased in numbers, approaching the impressive number of 9.9 million people and with them, borrowers have increased as well. Naturally, this has caused everyone else to have a harder time securing their mortgage.
Thus, when a self employed person like, say, a freelance writer wants to apply for a personal loan or for a mortgage, they will certainly encounter issues when applying for them. In fact, circumstances can get quite hard, and in most cases even when asking for a small personal loan, the applicants will be asked to have or provide some sort of warranty. In the case of mortgages, you might be asked to provide up to a 26-percent down payment beforehand.
All of these are clear signs that the barriers to get either a personal loan or a mortgages have changed, and not for the better.
Some of the requirements for getting a personal loan or a mortgage that can turn into obstacles being self-employed are:
– Uneven self-employment income, which rings all sorts of bells for lenders, putting them on the defensive side due to fear of you not receiving the expected income at some point.
– A one-time start-up expense from early on your life, which many lenders of mortgages and personal loans can (and will) categorize as an ongoing expense, affecting your chances of approval even further.
– Requirements on behalf of lenders that you should qualify for the payments on both your old home and the new one that you plan to get (ion the case of mortgages). This, even despite of you choosing to rent out your old house.
Do Everything You Can
These obstacles and disadvantages of acquiring a personal loan or mortgage while being self-employed are not meant to discourage you. In fact, they are meant for you to know that you will have to do everything you can in order to secure your personal loan or mortgage.
In many cases, even if your first loan officer can’t get you your financing, don’t hesitate or give up, just find a new one and don’t accept a NO for an answer until you get what you need. And remember, you are not alone on your quest. Quite the opposite in fact, since the number of self-employed people is just starting to grow with time.
Additionally, there might be moments when you process your application for a mortgage or personal loan, where the people helping you process it might simply tell you that they have a lot of documentation to process. This might not be always the case. in fact, in some cases these people are just trying to avoid processing the application of a self-employed person, since they know it will be a lot more work for them, so just push onwards and keep insisting.
And that would be it for now. On the next part of this article, we will address even more specific ways on which you can finally be accepted for a mortgage or a personal loan. So stay tuned.