4 Tips for Getting a Mortgage When You’re Self Employed

1. Prove your income when your self employed

When you are self-employed we to need evidence that your business is running profitably and that you are drawing an income from the business.  Sadly, payslips don’t count when you own a business as you could pay yourself a large salary however the business may be running at a loss.

We can add the following together to create your income,

 – Shareholder salary,

 – Depreciation

 – Net Profit of the business if any

 – Home office expense

 – Interest Expense

If you are newly self-employed it is often very hard to obtain finance as there is no evidence of your annual income.  This does not mean that it cannot happen however we will likely need to provide the bank with much more information.

2. Provide a Solid Outline of What Your Business Does

It’s important for the bank to understand how your business operates and how you earn your revenue.  They need to have comfort in knowing that you have a viable business and that you are an eligible lender and have the skills to run a profitable business. 

If you generate your income in bursts or seasons, then we need to show to the bank that the level of income generated in those periods is sufficient for the operation of the business annually and can maintain your household and the mortgage you are requesting

3. Evidence Your Deposit

Clearly a deposit is required when you purchase a property in New Zealand with the standard deposit required being 20% of the purchase price of the property.  The bank needs to understand where the funds have come from for your deposit. 

Deposit can come from the following sources

 – Savings

 – Withdrawal from your business bank account

 – Kiwisaver

 – Gift from Family

If you are recently self employed the banks typically need you to have at least 20% deposit and to have an even more robust rundown of your business which may include future projections of the next financial year which would be in line with the level of revenue you are currently generating. 

4. Complete Robust Statement of Financial Position

The bank needs to establish whether you can afford the required mortgage at the same time as servicing your current level of debt that you may have and your ongoing monthly expenses. 

For a self employed client we need to include any of the assets and liabilities that your business has within your personal application. 

The Process TO MOVING

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The process is simple and easy.

01.

I will help you to calculate your projected equity so we know what you are working with.

02.

Apply to the most suitable bank and have you pre-approved to purchase based on selling your home.

03.

Arrange the deposit funds for when you purchase your new home.

04.

Structure your mortgage as cleverly as possible so you can affordably pay the mortgage down as fast as possible.  

05.

Make sure the money turns up on Settlement day.

06.

Help you manage your mortgage for years to come (re-fixes, restructures, refinancing).

The mortgage experts on your team

Loan Market is a team of experts based in Auckland, New Zealand led by mortgage advisor Ryan Amoore. Ryan’s team includes lawyers, accountants, builders, building inspectors and other professionals who work together to give you the best value for your buck.

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If this all sounds good to you, give me a call and get the process started.  

C