One of the most frequently asked questions when it comes to mortgages is, “can independent contractors get a mortgage”? The answer is yes. Independent contractors can also get a mortgage just like any other self-employed person. However, there are some challenges that independent contractors may face in their journey to homeownership as opposed to those that work for an employer. The application process can be quite challenging and the failure rate can also be very high.
In this article, we look at how independent contractors can get a mortgage from banks or from the best private lenders in BC. We also look at the tips that can help these professionals get a mortgage faster. Let’s get started.
Criteria For Lending Independent Contractors
Lenders typically have various criteria they use to determine how much they are willing to lend independent contractors. For instance, they may look at the contractor’s average income based on a certain number of years, or use the contractor’s yearly income from a particular period.
The lenders can also use the contractor’s day rate to determine the amount the contractor is likely to earn. They will use the figure and multiply it by the number of weeks they earn to get an estimated amount of money they should lend the contractor. However, note that different lenders use different criteria to know how much they should lend the contractor.
Documents You Need To Get a Mortgage As an Independent Contractor
Here are some of the documents your lender will ask you to provide when applying for an mortgage:
- Bank statements
- Proof of experience and your daily rate
- SA302 tax calculations
Tips To Help You Apply For a Mortgage As an Independent Contractor
1. Improve Your Credit Score
One of the things that lenders pay attention to when lending money to contractors is credit history. They must be sure that you can repay your debts. The higher your credit score, the higher your chances of getting a mortgage. So you need to check your credit score and look for ways to improve it by paying your bills on time, repaying your credit cards, etc.
Thankfully, when working with private mortgage lenders or hard money lenders, your credit score won’t matter. And that\s regardless if you are interested in getting a home equity loan in BC or a alternative mortgage,
2. Create a Consistent Work Pattern
Your lender is also more likely to pay attention to your working pattern when lending you a home loan. That’s why you need to take on a steady flow of work a few months before you apply for your mortgage.
3. Gather All The Evidence
Of course, even if you have had a consistent flow of jobs, most traditional lenders will only get convinced if you have evidence to prove it. That’s why you need to gather all the bank statements, accounts, and invoices that show your operating costs.