Mortgage for self-employee
Few years ago almost utopia, nowadays it is reality. Even as a self-employee, you can get mortgage with common parameters. And it is not so important if you keep single-entry accounting or if you apply fixed fee (flat rate). Of course, every bank has its specifications.
The point is that even though you optimize the tax declaration to pay minimum taxes, it doesn’t have to necessarily mean more costly loan in comparison with employed people who present “standard” certificate of income. Sometimes, it is enough to present only a self-certification (solemn declaration) to demonstrate the income. Almost unbelievable, isn’t it?
Example from praxis: Man (32), self-employee for the third year, has achieved by turnover of 430,000CZK a mortgage in the amount of 2,1 million CZK with interest rate of 1.99 %. The self-employee applies 80% of flat rate (fixed fee) in his tax declaration and lives alone.
Specifications of mortgage for self-employee
Demonstration of income. While employee generally demonstrates salary confirmed by the employer, bank calculates average salary after taxes per three, six, twelve months. Self-employee shows one or two last tax declarations (tax returns). If you have just started doing business, you’ll have to wait till the tax declaration (tax return).
One offer is valid until the end of the year. Because the bank takes data from the same supporting documents by its offer evaluation, it offers you the same conditions all the time till the presentation of “newer” tax declaration. It does not have any sense to try the same bank in April and then in December.
Diametrically (fundamentally) different evaluation of income amount. Examples from praxis: first bank counted the income of 15,000 CZK to the client, second 28,000 CZK and third one even 36,000 CZK! However, I presented identical tax declaration to all banks.
The role in evaluation plays
- the way of application of costs (real versus fixed fee – flat rate)
- total turnover – there has been tightened up
- branch (subject) of business
General calculators for mortgages don’t work for the mortgage amount. Why? Every self-employee is different for banks. While the bank has “certainty” of some regular income by employee, the view on self-employee is totally different. This is a why there is big individual approach and different possible mortgage amount.
How much do you get from bank? It depends on concrete tax declaration (tax return). If you send me your tax declaration (without the first page where personal data is can be without any problem) by email to email@example.com, I’ll calculate you the maximum mortgage amount for some banks (I have access to their methodologies and calculators) up to two days. Of course, we will exchange few emails or calls to specify what you need to finance or what possibilities we have.
And what about if you really optimize your taxes too much? It is possible to work with that too. We will make a meeting with your accountant and we will tune your tax declaration just enough. I solve this mainly at the beginning of the year with clients before presenting tax declaration. When I accurately calculate to them how the tax declaration should look like so that they would achieve the desired mortgage amount … but that it wouldn’t hurt so much.