Top Tips To Secure A Mortgage As A Business Owner

By accessibleproperty

April 22, 2022

Running your own business can provide you with greater levels of freedom and flexibility. While you may enjoy more financial security, banks may not always see it the same way. As a result, business owners may find it more difficult to secure a mortgage than those in more traditional lines of employment. Despite the challenges you may encounter, securing a mortgage is not impossible. Not every lender is the same, and many of them acknowledge this fast-growing sector of the economy. Below you will find some useful tips to improve your chances of getting a mortgage as a business owner.

Organise Your Accounts

Firstly, to secure a mortgage as a business owner, you will need to obtain copies of your accounts. The range of accounts that will be required depends entirely on the lender. For example, you may need to provide anything from 6 months to 3 years of accounts. Most lenders will ask for copies of your SA302 form. This document outlines your tax liabilities and is often used as proof of income. If you have only recently opened your business, it may be more complicated. Although your business may be booming, you will need to provide evidence of financial security to lenders.

Work With A Specialist Broker

As a self-employed business owner, you can benefit from the help of a specialist mortgage broker, who can offer unique property finance advice. Advias is a leading property finance advisor for large residential mortgages, commercial mortgages, bridging and development finance. By leveraging technology, their experienced advisors are able to offer the best experience to each client. Thanks to their expertise and personable approach, you will be guided through each stage so that you can secure the right offer for your unique requirements. Working with a specialist broker will also ensure you avoid submitting applications when you could potentially be turned down. 

Check Your Credit Score

While credit scores are not the only factor considered by lenders, it is worth checking what yours looks like before you apply. It is advisable to sign up to all three major credit reference agencies – TransUnion, Equifax, and Experian. This will provide you with a clear picture of your finances and chances of getting approved. The higher your credit score, the better your mortgage application will look to lenders. However, to keep your credit score up, it is important to be careful how you use and apply for credit. Be sure to keep your credit applications to a minimum, as every time you apply, your credit score decreases.

Save Up A Large Deposit

Saving up a larger deposit will increase your chances of getting the loan that you need. Therefore, it can be helpful to have your deposit ready to go when you make your mortgage application. The minimum deposit is 5% of the value of the property. However, if you can secure 10-20% of the property value, you are more likely to be given preferential rates. This means that you will benefit from affordable monthly repayments and you will boost your chances, as lenders will see you are serious. It may be helpful to use this mortgage calculator to get a better understanding of how to prepare.

Stay On Budget

Alongside your business finances and credit score, lenders will conduct an affordability assessment, which examines your income and outgoings. This may involve looking at your utility bills, car payments, monthly shopping spend, and loan payments. The amount you have left after your monthly expenses will affect your mortgage eligibility and how much a bank can lend you. It is recommended to keep monthly outgoings to a minimum in the months before applying for a mortgage. Also, if you have any outstanding credit cards or loans, try to repay them in time for your application.

Maintain Good Business Relationships

Lenders will also expect to see a good track record of work, so it may be beneficial to have guaranteed work planned for the future. For example, it will be advantageous, if you have good relationships with your customers or clients. If your business provides a particular service, you may want to look at ways to secure long-term contracts. This will serve as proof to lenders that you have the capability to maintain and increase your income, which will give them assurance that you are a safe choice.

Register To VoteLastly, don’t forget to sign up to the electoral register as this will not only improve your credit score, but it will also boost your mortgage chances. When lenders carry out background checks, they use the electoral register to verify the identity and address of applicants. This is why, it is crucial to contact your local council and register to vote at your current address. If you are concerned about your privacy, you can request that you are only added to the register that is not publicly viewable.