For the self employed
A profit and loss (P&L) mortgage is a type of mortgage that allows self-employed borrowers to qualify for a loan based on their business's income, as shown on their profit and loss statement. This can be a helpful option for self-employed borrowers who have difficulty qualifying for a traditional mortgage because their income is not easily verifiable through tax returns or bank statements.
To qualify for a P&L mortgage, borrowers will need to provide a profit and loss statement that has been prepared by a certified public accountant (CPA). The CPA will need to attest to the accuracy of the statement and verify that the business has been operating for at least two years. The lender will also review the business's cash flow statement and balance sheet to assess its financial strength.
P&L mortgages typically have higher interest rates than traditional mortgages. This is because they are considered to be riskier loans, as the lender has less documentation to verify the borrower's income. However, P&L mortgages can be a good option for self-employed borrowers who are unable to qualify for a traditional mortgage.
Here are some of the pros and cons of P&L mortgages:
Pros:
Cons:
