You are an entrepreneur or you are thinking of starting for yourself in the form of a sole trader. It is a step that many people make. You can also ensure a stable income as a self-employed person.
But, especially when you have just started, you often have to deal with a variable income. Or with customers who may not always pay the bill on time. For these reasons, banks and lenders often look critically at your situation when applying for a mortgage. They constantly wonder whether you can pay the monthly recurring charges on time.
Can I take out a mortgage as a self-employed person?
To determine whether you are eligible for a mortgage, your assessment income is determined. This is the average income of the last three calendar years.
This may also be a combination of income from your company and from an employment relationship. The bank calculates the maximum mortgage amount on the basis of this test income.
Ask yourself the following questions
To qualify for a mortgage, it is useful to make your financial situation transparent. To start for yourself of course, so that you can answer any questions from a mortgage adviser or bank at a later time. These are the most important questions you can expect:
How long do you work as a freelancer?
What kind of work do you do?
Did you do this work before when you were still employed?
In which industry do you work?
How are things in the industry where you work?
How has the profit of your company developed in recent years?
What is your profit forecast for the coming years?
Prepare well for the interview
You do well to be able to submit your financial situation. Put your annual figures for the last three calendar years in an overview. Insure yourself against loss of income due to disability and death. And, if possible, provide starting capital in addition to your mortgage.
I have been active for less than three years
If you have not been active as a self-employed person for less than three years, lenders also look at income that you may have had from paid employment.
In order to stand a chance as a self-employed person with a mortgage with a National Mortgage Guarantee (NHG), you must have been in business for at least a year. You do need a positive forecast for the future. And you usually also have to meet additional conditions. Your bank or mortgage provider will tell you more about this.
After a year already eligible for a mortgage with NGH
There is good news for independent entrepreneurs! You can be eligible for a National Mortgage Guarantee mortgage from 1 December 2016. This can be done after a year. This period was always three years. Please note: not every mortgage provider participates in this.
There are of course conditions to qualify for this. A condition is that the Home Owner’s Guarantee Fund (WEW) determines the assessment income. The WEW appoints an expert for this. The costs for having this statement drawn up are a maximum of € 250 excluding VAT. The income statement that you receive from the WEW is valid for six months.
How does the Home Owner’s Guarantee Fund determine the assessment income?
The starting point is the average income of the last three calendar years. This can also be a combination of income from your company and from employment.
Income from social benefits does not count. In the last year of these three, did you earn less from the average income? Then the income from the last year applies to the test income. The WEW expert also looks at the current financial year. The current income must follow the line of the average.