Being self employed definitely has its perks; flexibility, uncapped earnings, the ability to work from home. It also has its pitfalls too; working long hours, being completely accountable and not being able to get loans or mortgages. It can be really difficult for the self employed to get a loan or mortgage, due to the risky nature of not being fully employed. It may seem odd, seeing as you may feel far more secure being self employed than working for a corporation, but it is the way many lenders operate. If you need to get a loan, for any reason, then here are some top tips for the self employed.
3 Years Worth of Accounts
Before you even try to apply for a loan whilst self employed, we would recommend having at least 3 years of accounts. Nearly every lender and mortgage company will ask to see the last 3 years worth of takings for your business, in order for them to assess the risks involved with lending to you. They may also ask that these accounts be verified by an ACA Accountant or equivalent, so that there is no doubt that the figures are 100% accurate. If you haven’t been operating for 3 years then it is still worth asking, as some will drop their limit to 2 years; depending on your previous credit history.
Loan Comparison Websites
There are a whole load of financial comparison websites online nowadays, many of which have sections for the self employed. If you’re struggling to find a lender that will even consider you then take a look through some of the options on comparison websites. It is likely you may have never heard of some of the lenders and mortgage providers, so it is worth doing some research before applying. Remember, if you apply for a loan then it will show up on your credit report, so don’t apply for every company you find! See what other people are saying about the lender before you agree to go through an application process. It may be that you’re recommended to a broker instead, however, these companies may charge you huge fees just for searching. Read all of the small print and find out what you’re getting yourself into first.
A loan secured by a guarantor is a great alternative for those who are self employed. A guarantor is somebody who says that they trust you to repay the loan, and if you don’t then they will. They have to have a pretty good credit rating themselves, normally be a homeowner and in full-time employment. Have a look at websites such as buddyloans.com and see what their specific requirements are for a guarantor. Now all you need to do is find someone who trusts you and is willing to pay back your loan if you don’t!
Hire a Financial Expert
If you’re really struggling to make ends meet and cannot find a lender or mortgage provider that suits you, then consider a financial expert. It could be a qualified accountant or a financial advisor; just someone who knows their stuff. They may be able to point you in the direction of other funding opportunities that do not matter if you’re self employed or not. An accountant may also be able to help you with the accounts you need for some of the other lenders, too!
It can be a struggle to get financial assistance when you’re self-employed, but it isn’t altogether impossible. Make sure you check out all of the options available to you before going for the first lender that takes on self employed borrowers!