Many people wanting to take out a mortgage wonder if this is possible when running their own business. See http://facenba.org for the scoop
Running a business on your own can be a problem when you take out a mortgage.
As it turns out, various banks are much more willing to grant mortgage loans to entities that receive remuneration by virtue of employment contract. Stable work and a stable source of income are proof for the bank that the borrower will be able to repay his loan. Is it impossible to take such a loan while running a business?
Time to run your own business
The period of conducting a business activity by a potential borrower is not without significance for the bank. As it turns out, banks prefer to grant such loans to entities that operate for a relatively long time. Owners of companies that exist on the market shortly, e.g. 6 months before submitting the mortgage application, may receive a negative answer. Most banks grant loans to entities whose company was established even 12 or 24 months before submitting the application. The bank must recognize that the entrepreneur has a steady income from the company and will be able to repay the debt.
Reliable fulfillment of obligations
The bank is more willing to grant a mortgage to entrepreneurs who have a solid approach to paying for bank debts and whose activities have not been suspended. The first step the bank may take is to check that the potential borrower is in arrears with any payments. The client will also be checked in various databases and registers, and it is on the basis of this knowledge that the bank will decide to grant a mortgage. The bank will also certainly check the company’s condition and how successfully it remains on the market. If the company was suspended, the bank can quickly find that the business activity has outgrown the entrepreneur, and the mortgage application will be automatically rejected.
Regularity of income
Entrepreneurs whose incomes are irregular and, moreover, often of different sizes may also have difficulties obtaining a mortgage. The problem arises especially when the bank observes larger withdrawals in the last few months and recognizes that these revenues have been fabricated for the purposes of obtaining creditworthiness. An action that will certainly be taken by the bank will be checking the regularity and repeatability of revenues. This practice is important so that the potential borrower can authenticate his ability to pay off the mortgage.
Mortgage – YES!
Taking a mortgage while running your own business is possible, but the client must prepare for many difficulties that will come in his way. Banks are more likely to grant mortgage loans to entities that obtain their income from an employment contract, which is why obtaining such a loan in the case of irregular income may prove to be a big challenge.
Meet the requirements!
It should be remembered, however, that obtaining such a loan is not impossible and by meeting several necessary requirements, the bank should grant a mortgage to entrepreneurs with their own company.