Remortgaging for the Self Employed
For those who are self employed, securing a mortgage in the first place presented additional challenges compared to the person who is employed by another company. When posed with considering a remortgage, there are options out there but they can be difficult to find and secure. There are a couple ways to go about securing a remortgage while self employed though and with some smart shopping and research, the benefits of remortgaging can be had for the self employed.
Get Your Affairs In Order
Before even going to start the process of securing a remortgage, the self employed individual needs to get their paperwork in order. Over preparing during this step is impossible as each bank could require some type of proof income that varies and having everything will help make getting this information to each lender in their preferred method. For some lenders, a simple yearly profit and loss statement will be sufficient to show that your income is where it needs to be to be able to make your monthly loan payments.
For other lenders, they will want a far more detailed accounting of your income and possibly even a copy of your business plan and other information showing the viability of your self employed business model. While this may seem intrusive, consider things from their end. They want to insulate themselves from risk and by checking on your business plan and the industry you work in, they can better verify that their risk is going to be minimal, even on a remortgage where you have paid your existing mortgage on time for years.
Making sure you have all of your business documents as well as previous year’s tax returns will help immensely during the process of securing a remortgage. It is far easier to take the time prior to starting the process than trying to get all of these documents together during the process.
Going With a No Proof of Income Remortgage
Instead of worrying about the hassles of getting your entire business plan, proof of income and profit and loss statements in order, there are companies out there that specialize in mortgage and remortgage products that have no proof of income requirements. However, many of these companies will not make much sense from a savings standpoint because they charge higher fees and higher interest rates to make up for the higher risk they are taking by not verifying the remortgager’s income. However, if your business is just starting to be profitable or your previous year’s taxes show a far lower amount than what you actually made, then it can be an option to consider.
Ultimately, you know best whether you can afford your mortgage payment and if you can save money, you know that the savings can be spent elsewhere or tucked away for improvements or simply a rainy day. Be aware of the costs and consider trying to get a standard remortgage but also consider a no proof of income remortgage as a backup plan, provided it will actually save you money.
Research
For the self employed individual seeking a remortgage, some research is going to be necessary because not all companies that offer remortgage services are created equal. Some will simply choose not to do business with you because your remortgage is going to be a special case requiring more time and cost on the mortgage company’s side of things. Rather than being an open and shut case, it will require research on their end and the analyst that actually makes the final determination will have to spend alot more time on the self employed remortgage request than most other cases.
Some companies will work with self employed individuals but will charge a premium for this same reason. They know that it is going to take more time, so therefore the make up for this time difference with higher fees or higher interest rates. When researching companies, get an idea of their standard rates and closing costs and be sure to ask if there are any additional costs or higher rates for those that are self employed. Finding a company that is happy to work with self employed people and does not charge extra is something that can be done, but the research must be done to root them out as they are typically smaller mortgage companies that specialize in either self employed and small business mortgages or simply specialize in special cases which includes the self employed.
Getting Ready for Closing
All of the normal things will happen between choosing a company to use for your remortgage and your final closing. This includes inspections and appraisals that will contribute to the decision whether or not the remortgage is going to happen or if there will be additional requirements when it comes time to do the remortgage. During this phase, being available for inspections and appraisals is vital to the process and should be factored into the decision to remortgage in the first place. If your self employed nature allows you to work from home, this makes you the appraiser and inspector’s best friend by being very flexible about when they can come out to do their portion of the process. If you are self employed but work outside of the home, factor into your decision that you will need to be available during business hours for at least a couple days during this process. If you cannot afford to take the time off, the remortgage may have to wait at least for now.
Closing
The closing process itself can be a long process. Again, this will be done during normal business hours so be sure you have the flexibility to take the time off so you can sign all the paperwork necessary to process the remortgage. However, going through a remortgage can easily save enough money over the course of a year, much less the life of the loan, to validate taking time away from your small business ventures. Remembering the savings potential will help ease the burden of having to make up work hours in the evening or working harder for a few days afterwards.