Guide To Getting A Mortgage When Self-Employed
Leading property portal explores the process of getting a mortgage if you are self-employed
With the rising demand for home ownership, an increasing number of people are securing mortgages to finance their dream of buying property. However, without a stable source of income, it can be especially difficult for the self-employed to secure a home loan from financial institutions.
As a self-employed individual, most lenders tend to have reservations about financing your project. The lenders see this group of people as the least ideal borrower primarily because of the risk involved. Often their income is not steady enough to warrant a direct mortgage from the financiers. When selecting a lender to work with, it’s worth sourcing a service that works directly with specialist advisors, like Regulatory Solutions, who will ensure that they are up to date on all of the latest rules and regulations regarding the varying mortgage types available and who is eligible for them.
Lamudi Kenya Managing Director Dan Karua said: “Securing a mortgage can be a challenge for self-employed individuals because lenders tend to see them as a liability when it comes to repaying the loan. But you need not worry as there are mortgage products tailor-made to suit the self-employed.”
If you are self-employed, you will first need to have all legal business documents in place to prove your means of income is legitimate. This will enable the lender to verify your stream of income and its credit worth. It also shows your commitment to your business and it may act as collateral to your loan. You will also have to provide details about the history of your company, including its profile and background.
Secondly, you will need proper financial records for your business. You need to have good financial records that will determine how much credit you are eligible for. This should include audited financial records of your company for the last three years. These documents will act as proof of the strong financial performance of your business and will help you secure a loan.
Bank statements will also be required. This will help the lender verify your ability to repay the loan. As a guide, it is recommended that you do not borrow more than two and a half times your annual gross income.
Finally, you will need a sales agreement for the property accompanied by a copy of ID/Passport for the directors of your company and a copy of the Kenya Revenue Authority (KRA) Pin for the directors or registered business owner(s). It may be possible to negotiate a flexible interest and loan repayment period at this time.
“As with all home loans, you will need to shop around to find the best mortgage provider to suit your needs. Most lending institutions have different interest rates and loan repayment periods of between 10 and 25 years, noting that the maximum age at the end of the mortgage term must be 60 years or retirement age whichever is earlier. So choose one that is tailored to your individual financial situation” Mr. Karua said.
Launched in 2013, Lamudi is a global property portal focusing exclusively on emerging markets. The fast-growing platform is currently available in 32 countries in Asia, the Middle East, Africa and Latin America, with more than 800,000 real estate listings across its global network. The leading real estate marketplace offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online.