Contractor mortgages
are heaven’s answer to unconventional workers’ prayers.
Freelancers, or those with no permanent employment, are
often looked down upon by others because, for them, freelancing is not a
legitimate job.
There is a stigma to the term ‘freelancer.’ Someone who
works freelance is viewed by a certain number of people as someone who cannot
hold down a job, hence the instability of employment.
And because they are seen as unconventional employees who
have unstable sources of income, they can be considered high-risk borrowers by
financial institutions. This is why they are most likely to be denied of a
mortgage application.
How does one get
approved for a mortgage?
For an individual to get approved for a mortgage, several
requirements need to be met.
A borrower has to, first and foremost, prove his ability to
pay off the loan should he be lent some money. That means he must show proof of
employment. It’s not enough that someone has a current job. It has to be
long-term. Lenders don’t want to risk suffering any losses when a borrower
defaults on a payment and the only reason that could happen is when the borrower
loses his source of income.
This is why a solid working history is important. Lenders
make sure that a borrower has a job that would provide income for the years to
come since mortgages are paid off in a span of several years.
A borrower must also have a good credit score as that
indicates how responsible he is with financial responsibilities. The higher
score one has, the lower risk he poses to the lenders. This is why lenders
approve loans easily to people with a good credit score.
Why are freelancers
typically discriminated by lenders?
The reason most freelancers—writers, designers, virtual
assistants, stylists, editors, etc.—are discriminated by financial institutions
when it comes to mortgage application is they cannot meet the first requirement:
having a stable source of income.
The very nature of freelancer is what poses a problem.
People who work freelance are not bound to any company. They do not have
long-term contracts. Most of them work on a project basis and don’t usually get
to know if there is another project from that client.
Most freelancers won’t be able to tell if there are projects
lined up for the following months.
Although a lot of freelancers earn a lot of money, the very
nature of their job makes them not very good candidates for standard mortgages.
Now you could be freelancing for years and have saved up
enough money to settle for a down payment but still not get approved for a
loan. Don’t be surprised if this happens to you. Since you do not have a
permanent employment, it’s highly possible that your requests get denied.
So what do you do?
Contractor mortgages
are the answer to the problem
Contractor mortgages offer freelancers (and other
unconventional workers) the opportunity to own a home. Today, freelancers are
being considered by several lenders as possible candidates for mortgage
applications because of the increasing number of people who are getting in this
type of work.
These mortgages are similar to the standard ones individuals
with permanent employment get. The only difference is these are geared towards
making it easier for contractors to realize their dreams of becoming
homeowners.
The process is really easy. All you need to do is look for
mortgage brokers, both online and offline. These people are willing to help you
find the best deals and get approved for contractor
home loans. With their experience and expertise, it won’t be too long
before you are signing papers as indication that you are a proud owner of a new
house.
