Real Estate Financing for Entrepreneur
For the lender, the financing of a property for the self-employed or an entrepreneur is a kind of commercial finance, which has to be valuated differently with regard to lending or according to special guidelines. The often-fluctuating income situation makes processing difficult for lenders. Not every bank is willing to accept the self-employed as a customer. Therefore, financing a property for freelancers or entrepreneurs is significantly more difficult than for employees or civil servants, but is still realizable.
Lenders see increased risk when it comes to lending to the self-employed. Therefore, they approve the loans with higher interest rates. It is also quite common for lenders to require the inclusion of a second person, usually the life partner.
Lenders already distinguish between freelancers and entrepreneurs. Freelancers such as doctors, lawyers and architects are often accepted like employees and get loans on employee terms.
Traders such as craftsmen and entrepreneurs often have to expect interest surcharges.
Industry sectors like gastronomy where lenders are concerned that they can service the loans permanently have little chance.
Real estate loans for the entrepreneur
Even if it is more difficult for the entrepreneur to realize the desire for their own property, it is often feasible.
We support you in your project and support you in compiling the documents, conducting the credit talks until the financing is successfully concluded.
In order to get the funding successfully through, good preparation is required for the application.
The following documents are required:
- Business evaluations of the past months (BWA)
- Tax assessments from the past three years and the corresponding balance sheets from this period
- Freelancers have to present the income surplus statement of the past three years.
- Your last income tax assessment notices for the past 3 years
- A current self-disclosure
- A list of your income and expenses
- If necessary, evidence of relevant insurance such as life insurance, disability insurance, long-term care insurance
Further information are required or leads to faster and positive processing of the loan application:
Self-employment or entrepreneurship should be exercised for at least more than 3 years. It should have positive income relationships with as few fluctuations as possible.
Good creditworthiness and positive Schufa information are the basic requirements for mortgage lending. Otherwise you need a co-applicant, who can secure the operation of the financing alone if necessary.
It must be clear to the lender that your net income is high enough to allow you to use the financing over the entire term after deducting the cost of living.
It is a good sign if you can pay 10-20% of the purchase price and the ancillary purchase costs from your equity, if possible. High equity not only lowers the risk for the lender, but also lowers the borrowing rate and the monthly instalments and loan duration.
Additional collateral, such as life insurance and / or occupational disability insurance, protects the self-employed / entrepreneur and their families in the event of illness or unexpected death from defaults and financial emergencies.
If the life partner has a regular income as an employee and submits the funding application together, the chances of approval increase significantly.
Financing a property in a good location and in good condition is preferred compared to a property in need of renovation and in less attractive location.
The amount of the loan and the monthly loan instalments should be affordable even with fluctuations in income over time. .
Right loan type
If you expect significant improvements in your business in the coming years, you should first choose a variable loan. You can cancel the loan later with three months’ notice and agree on an annuity loan.
Agree on special repayment
You can use this to reduce your debts in times of good income.
Adjust repayment rate
It should be possible to change the repayment rate up or down if business is particularly good or at times worse.
Choose a long term or fixed interest rate
It is advisable to choose rather long loan terms. In this way, you can avoid risks such as concluding follow-up financing at an unfavorable point in time, most likely under worse conditions.
REAL ESTATE FOR SELF-EMPLOYED / ENTREPRENEUR with us
We are your independent and neutral advisor in all questions of real estate financing. The earlier you come to us, the more extensive and without time pressure we can advise you. You benefit from our many years of experience and knowledge of how to fulfill your real estate wish. After extensive analysis of the conditions of over 400 lenders, we will objectively present you the best offers so that you can make the right choice.
By the way, our advice, use and mediation is non-binding and free of charge for you. We get our money from the lender for processing and brokering, no matter which lender you ultimately choose. Our experience is your guarantee of success.