To qualify for standard mortgages with your lending financial institution, you must provide proof of income. For the average employee, this is usually pretty straightforward, but for the self-employed, freelancers and artists of the world, this can get a little more complex. Often self-employed artists will need to provide much more documentation about their business and sources of income. Here we have outlined some important points to keep in mind when applying for a mortgage for a self-employed artist.
Proof of Income
The most challenging part will be justifying your self-employment income, as it is calculated after expenses and other deductions and may appear to be less than a comparable base salary for an employee. For starters, self-employed individuals must show a minimum of two years and an acceptable deposit, no less than 10%. The lower your income, the lower the mortgage amount you can apply for. All of this will need to be demonstrated and backed up by supporting documentation such as a tax calculation (SA302s) and a record of regular work.
As a self-employed artist applying for a mortgage, you should be prepared to answer questions about your particular field and how you generate income. Depending on the situation’s complexity, lending agencies may require to see bank deposits, invoices, and contracts with clients. If you are a self-employed artist looking to remortgage, not be surprised how much more paperwork is also required for renewal. The best thing you can do is be well organised and prepared to provide all necessary accounting information.
A clean credit score (561 or higher) is necessary to qualify for the best possible mortgage. Late payments on a credit card or smaller loans will make it difficult to get a mortgage. Keep in mind also that multiple credit checks can also alert lending agencies. They may think your application differs from each loan agency, putting you in a bad light with mortgage providers. Using an online mortgage adviser, such as Trussle, means you’ll undergo a soft credit check and get all mortgage options simultaneously, meaning it does not affect your credit score. It is possible to still process an application with poor credit, but you may be asked to provide a larger deposit and pay a higher interest rate on your mortgage.
When and Where
When applying for a mortgage as a freelance artist with irregular work hours or locations, internet-based services give access to certain services at unusual times, which often agrees better with such a schedule. The first two years as a freelance artist can be the most difficult, as getting a steady income and regular work is challenging. It is hard to demonstrate that you earn the equivalent of someone in a full-time job. Therefore, a little patience is required. If you have recently started generating income or become self-employed, then you should wait two years to accumulate the necessary self-employment income.
In addition to keeping paperwork up to date, it is also vital that a self-employed individual choose the right time to apply for a mortgage. For instance, apply at the time of the year when your revenue is particularly high, and you can easily show that you can meet the lending agencies’ requirements.
Develop the habit of keeping good records now to make your mortgage application a little easier in the future, and you won’t regret it.