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As you may have read earlier, we are not only in the middle of 'our' pregnancy, but also in the middle of the process of applying for a mortgage. The target? To have all this arranged within 3 months (and yes, I am talking about both the owner-occupied home and the little man in my belly).
You can imagine that I have put everything in place to increase my / our chances of a mortgage. Because as an independent entrepreneur I know that my financial situation is just a little less 'reliable' than that of someone with a full-time job and permanent contract.
From my experience I would like to share the tips that I have applied to increase my chances of a mortgage.
1. Show that you can save
Before you start applying for a mortgage, you must be able to show that you can save. Even if it is just under 50 euros per month to a savings account. Also try not to touch this savings. In this way you show the bank that even when you pay all the fixed costs, you still have the option of saving a little every month: without needing this money.
2. Watch your expenses
Of course you pay attention to your expenses when you want to take out a mortgage: you simply need money. But what I mainly mean is that you look carefully where you spend your money. I don't know if it is the same in the Netherlands, but here in Ireland you have a greater chance of disapproval if you regularly spend money on casinos or online gamble games. So it certainly doesn't hurt to make your bill look 'neat and reliable'.
The more you can save, the more confidence a possible lender will have in you.
3. Come with a piggy bank yourself
Do you have the time to build a piggy bank? Then make sure you do this. The larger your piggy bank, the more confidence the bank (or another mortgage lender) can have in your ability to pay your mortgage: even when everything goes against it for a month.
4. Get your administration in order.
Provide a clear, well-arranged administration where as few questions as possible can be put. I can only prove one-year full-time administration myself, but I have made it so clear and well-arranged (with the help of my accountant and her financial reports) that my independent entrepreneurship is undoubtedly profitable.
5. Come up with a business plan
Support your future prospects, current financial situation and the importance of your company, service or product with a good business plan. A solid business plan can give the mortgage lender that little bit of extra explanation and confidence that they are looking for.
I have even added an 'emergency plan' to my business plan in which I have worked out a scenario in the event of bankruptcy.
6. Do not borrow to the maximum
This tip is not only to increase your chances of a mortgage, but especially for yourself. A maximum loan amount is calculated on your annual income: but I would advise you not to borrow this entire amount. Firstly, your monthly costs become high and secondly, you have little room left. For example, we have decided to borrow for half of our maximum loan amount, and to buy a smaller home for less money that we then expand ourselves. Not only can we live wonderfully and we have something to do during the weekends: in a few years we will be able to sell with considerable profit and it will be a daily mortgage.
7. Add your CV
Adding your CV to your application can give the mortgage lender some extra confidence. For example, the fact that I have followed an 8-year course in marketing means that, even if I could no longer work as a self-employed person, I have a good chance of a good job. This gives the mortgage lender some extra security.
8. Talk to an Independent Mortgage Advisor
Take the effort and time to talk to an (number of) independent Mortgage Adviser. These can provide you with advice and help you in the process. Especially when you feel that your case is a bit more complicated, I can really recommend this. We are very happy with it so far; and the stress level stays nice and low.
Do you have any useful tips or experiences yourself? Share them in the comments!