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Mortgages for the self-employed: taboos you should break

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21 Aug 2017

Posted in:  First Time Buyer

Certain taboos run riot in Irish society.

If someone tells you that your hair looks good, it’s a must that you reply with, “Ah stop, I look like

I’ve gone through a hedge.” Likewise, if someone compliments your clothes, you’ll most likely give a bashful, “This old thing? I got it in a sale yonks ago.”

We’re a nation stuck in our ways and our customs, but certain taboos should be broken. For example, lots of people think that if you’re single you can’t get a mortgage – or that if you’re self-employed you’ve no hope of ever owning a home of your own.

But that’s not the truth. Here, we’re busting the self-employed mortgage myth once and for all.

How to get a mortgage as a self-employed person

So let’s smash the myth wide open: you absolutely can get a mortgage as a self-employed person if you have sufficient income and if your documentation is up to date. Getting a mortgage as a self-employed person or as an employee isn’t hugely different: you make your application, submit your documentation, and prove you can make your potential mortgage repayments.

However, the documents you’ll need do differ, and include:

  • 3 years’ financial accounts certified by an accountant
  • 6 months’ bank statements
  • 3 years’ Revenue Notices of Assessment and Tax Clearance confirmation

So let’s break down how you can get that self-employed mortgage into three steps:

1. Hire a great accountant

An excellent and trustworthy accountant will be one of your biggest assets in getting a mortgage as a self-employed person. As well as taking away some of the hassle in your financial life, they’re crucial to the approval process.

They’ll help you with audits, financial advice, and documents. Most financial institutions are strict about needing clarification from an accountant. This is to ascertain that your business is profitable and that you are fully tax-compliant. A good accountant will take the pain away from this process.

Some banks even require a letter confirming your business is making a profit and will continue to do so after you get your mortgage. Your lender is just looking to confirm that you’ll be able to make your mortgage repayments now and in the future.

2. Get your documents ready

For self-employed people, the documentation you’ll need is a bit more comprehensive, and includes:

  • Proof of certified/audited accounts

Depending on the lender and your circumstances, you may be asked to cough up a minimum of three years of accounts. In some cases, you may even be asked to go back through your history and provide several years of accounts, especially if your business went through a bumpy patch.

  • Revenue documents

This is a big one as it acts as a reassurance for your lender. it’s likely you’ll need tax returns and your Tax Clearance Certificate.

  • Account statements

As well as being asked about your personal account, you will need documentation for the last six months for your business account. If you’ve got a business credit card, you’ll need documents for the last six months for that too.

  • Contracts/official paperwork

Contracts are a good one as they back up the work you’re doing and any income streams you should have. It helps to show the lender that you have regular income and will be able to meet your mortgage repayments.

3. Get insurance

Mortgage protection/insurance is particularly important for self-employed people. If the worst were to happen and you passed away before the end of the mortgage term, your lender will pay off your mortgage for you.

Income protection is also a serious consideration for the self-employed, in case you fall ill and can’t work for a given period of time.

Mortgage tips for self-employed people

So, now you’re a bit more familiar with the ins-and-outs, let’s take a look at some final tips:

  • Make sure your accountant is certified or chartered and comes with good reviews. You don’t want to put your financial information in the wrong hands.
  • Keep your accounts up to date – nothing older than 18 months.
  • Don’t give up. Even if your finances aren’t quite in order or if your business is only starting and isn’t yet turning over the profit you’d anticipated, you don’t have to abandon your hopes of a mortgage. You may need to push it back for a couple of years, but don’t go into the process thinking it’s unachievable.
Thinking of applying for a mortgage?

If you want to know more about deposits or applying for a mortgage, a 30 Minute Mortgage Meeting with an EBS Mortgage Master will set you straight.

Get the ball rolling with our First Time Buyer guide. You can also use our mortgage calculator to find out how much you may be able to borrow.

If you have any queries about opening an EBS savings account, call 1850 654 321 or email info@ebs.ie.

EBS d.a.c. is regulated by the Central Bank of Ireland.

The content of this blog is expressed in broad terms and is limited to general information purposes only. Readers should always seek professional advice to address issues arising in specific contexts and not seek to rely on the information in this blog which does not constitute any form of advice or recommendation by EBS d.a.c.

EBS d.a.c. neither accepts nor assumes any responsibility in relation to the contents of this blog and excludes all warranties, undertakings and representations (either express or implied) to the fullest extent permitted under applicable law.

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