Useful advice on getting a mortgage when you are self employed

Getting a mortgage for a house is a very natural step for a person as they get older. However, it can often be a challenge for a self-employed person to get a lender to give them an adequate mortgage as they may see a certain level of risk attached to it. When people might not be making a steady income month on month, this may lead to missed payments at certain stages or a complete drying up of funds at some stage in the future. However, this does not mean that it is impossible by any stretch of the imagination.

If you have your affairs in order and can present a comprehensive case for yourself, you will have no problem getting a mortgage if you are self-employed.

It can often be useful utilising the services of a mortgage brokers in Melbourne who can help to identify the most suitable mortgage products and deals for your situation. Here is some advice that will help you through the process and learn what exactly the lenders are looking for when it comes to a self-employed individual.

Useful advice on getting a mortgage when you are self employed

Your previous few tax returns are important

When a lender starts to look into your financial situation, one of the first places they will look is your previous couple of tax returns. This is how they will try to get an estimate of what your average monthly income will be over the long run. This is normally the most important number that the lender will base their decision on, as it represents your ability to meet the full repayment each and every month.

If you are interested in knowing how exactly they reach this average number, it is very straightforward. They will take the figure of your adjusted gross income for each of the last two years and divide it by twenty four. This allows you to be prepared when you go for a meeting with the lender.

Your debt to income history

Another key area that lenders will look at is your credit score and your history with repaying debt as a whole. If a self-employed person has little history of using debt or they have a near flawless record of making repayments, they will be a lot more likely to give them their desired mortgage. If you have a history of missing debt repayments or you appear to use debt quite a lot, they may think twice about extended you a mortgage.

The majority of lenders will only lend you a certain amount as a percentage of your income. The best way to be certain of your chances of getting a mortgage if you are self-employed is to ensure that all of your different types of debt have been paid off fully and on time. This could be anything from student loans to car repayments. This improves your debt ratios and will show that you can be trusted with making complete and regular repayments.

Is it Easy to Get a Loan to Purchase Art?

Art is subjective, hard to authenticate, and hard to value, which is precisely why not many banks are interested to loan money to someone interested in purchasing art. However, if you happen to be billionaire art collector, then you can secure a loan with an interest rate of approximately 2.5% to 3%. However, since most of us aren’t billionaires with a huge collection of art in our houses, it can be difficult for us to obtain a loan. You can always rely on Mortgage Brokers to help you secure a loan for anything, though. Visit their website for more information at http://www.mortgagebrokerco.com.au/

Is it Easy to Get a Loan to Purchase Art

Loans you can get

Borro is an example of a company that can give you a short-term loan to purchase collectibles and art which are not as valuable. However, the interest rate that you will be charged will be worth between a staggering 35% and 83% per year. As mentioned earlier, if you are a millionaire with a huge art collection, you can also take loans from auction houses, Christie and Sotheby being examples of that; and they will give you loans at rates that are competitive, on the condition that you buy or sell your art collection through them.

Another option is taking a general purpose, non-recourse loan which is secured against your art’s value. This can be obtained from the market’s other specialist lenders. Once again, the interest rates will be high, going as high as over 20%, but you also have to consider the fact that no one that lends from places as such take loans below $500,000, and that such places also lend only 40% of the total value of the artwork.

If one were to make an estimate of the art lending market, it would be around $9.6 billion per year. However, the sales of art has far exceeded the borrowing rate, and is at an estimate of $63 billion, meaning that the art lending market isn’t worth much in comparison. As is obvious, it is quite expensive to get a loan to purchase art, and especially with the high interest rates, the price of the art, in most cases, doubles and even triples its original price.

The value of art and art loans

Since the valuation of art is variable, the art lending market is currently a niche. Art loans are complex, not only because their value is subjective, but also because their prices are volatile. It takes around a month or a month and a half just to process an art loan.

Although the market is worth a lot in total, there are hardly any new lenders who are interested in it. That is particularly the reason why there won’t be an increase in the art lending sector in the foreseen future. However, there is hope that when more companies start offering art loans, the prices and interest rates will decrease for both the lenders and borrowers alike.

To read more about art loans, read http://www.forbes.com/sites/kathryntully/2014/10/27/how-easy-is-it-to-get-an-art-backed-loan/