Tips for working from home without altering your financial situation with your mortgage?
Keep your lender informed. Always keep your mortgage lender informed of your work situation if you are at home. Although most lenders don’t mind, some mortgage clauses prohibit operating a business from your home. It’s important to find out, or you could be forced to pay off the entire mortgage if you don’t comply with the terms of your agreement.
If you do a regular office job from the comfort of your home, it is very unlikely that this will affect your mortgage. This is a factor for business owners to consider, rather than regular employees. A problem may arise if you are doing construction work on your home to facilitate your job.
Switch to a semi-commercial mortgage. If you need to do work on your home, you may be required to switch to a semi-commercial mortgage. Even this varies from lender to lender and usually depends on how much space your business uses in your home. On average, if your business (such as a gym or clinic) takes up 30% of the house, you will probably have to go with this type of loan.
Financial considerations to check. There are also a number of other financial factors to consider when working from home full-time. Here are some of the most important:
Legal issues. There may be deed restrictions that prohibit the use of your home for certain types of activities. You may also need to contact the municipality to obtain a building permit if you want to work from home.
Taxes. Contact the Valuation Office Agency to find out if you have to pay business taxes on certain parts of your home. You may also be required to pay capital gains tax on the portion of your home that has been converted to be used for your business.
Insurance. Contact your insurance provider to find out if your current policy is sufficient to cover your business, or if you need to purchase specific business insurance. You will also need liability insurance if you entertain clients in your home.
In summary, your mortgage should remain relatively unchanged as long as you have your lender’s approval and the work you do does not affect the structure of your home. If you think you need to switch to a semi-commercial mortgage, be sure to talk to a professional mortgage broker first for sound advice.