Newly revised mortgage guidelines for self-employed people due to the Covid-19 pandemic: There are temporary requirements for assessing income derived from self-employment. The additional due diligence is due to the disruption from the pandemic. Mortgage lenders now need to consider if and how a business has been impacted and the likelihood of income continuance.
There is additional income documentation required and you may need an audited Profit & Loss statement with supporting documentation for the Profit & Loss statement. The continuity and stability of income is what will be considered.
It can take quite a while for an accountant to put together an audited Profit & Loss statement, so it should be started at the very beginning of a loan application.
When a self-employed borrower has declining income from one year to the next or from the last year to the current year, this could be an obstacle in getting a mortgage.