If you're a business owner in New Zealand, getting a mortgage can be a bit more complicated than for someone who's employed by a company. While owning a business can offer many benefits, such as greater control over your income and tax deductions, it can also present some challenges when it comes to securing a mortgage.
Here are some things to know about getting a mortgage when you're in business:
1. You'll need to provide more documentation: When you're self-employed or own a business, lenders will typically require more documentation to verify your income and financial stability. This may include tax returns, bank statements, financial statements, and business registration documents. Be prepared to provide detailed information about your income and expenses, as well as any debt or liabilities you have.
2. Your income may be less predictable: Unlike someone who's employed by a company and has a steady paycheck, business owners' income can be more variable and less predictable. This can make it harder for lenders to assess your ability to make mortgage payments, especially if you have a seasonal or cyclical business. Be prepared to explain your income patterns and provide evidence of consistent income over time.
3. You may need a larger down payment: Lenders may require a larger down payment for self-employed borrowers or those who own a business, since they are considered higher risk. This may mean saving up more money before you can buy a home, or exploring alternative financing options like private lending or government-backed loans.
4. Your credit score will still matter: Just because you're a business owner doesn't mean your credit score is any less important when it comes to getting a mortgage. Lenders will still look at your credit history and credit score to determine your risk as a borrower. Be sure to check your credit report regularly and address any errors or issues before applying for a mortgage.
5. You may want to work with a mortgage advisor: Given the complexities of getting a mortgage when you're in business, it can be helpful to work with a mortgage advisor who has experience working with self-employed borrowers. They can help you navigate the application process, find lenders who specialise in working with business owners, and provide guidance on how to improve your chances of getting approved. We know a gret one here ;)
6. Plan ahead: If you're thinking of buying a home in the future, it's important to plan ahead and get your finances in order. This may mean saving up for a larger down payment, improving your credit score, or documenting your income and expenses more carefully. By being proactive and planning ahead, you can set yourself up for success when it comes to getting a mortgage as a business owner.
While getting a mortgage when you're in business may require more effort and documentation, it's still possible to achieve your homeownership or investment goals. By working with a mortgage advisor and being prepared to provide detailed information about your finances and business, you can improve your chances of getting approved and move one step closer to owning your dream home.
Disclaimer: This content is not intended to replace advice from your mortgage advisor, and does not take into account your specific financial situation. This is not personalised advice and is factual only. Please do your research and work alongside a mortgage professional to find the best solutions for you. Please get in touch if you’d like specific advice or just want to have a chat!