Self Employed Home Loan
Home loan secrets for the Self Employed!
Banks just love to make it hard for anyone with a business to borrow money!
They want tax returns, notices of assessment and then letters from your accountant, making applying for a loan incredibly difficult!
Luckily not every bank needs the same requirements for the self employed!
Read on to find out the tricks to getting your loan approved…
- How long do I need to be self employed for?
- Which lenders can help?
- How do lenders calculate my income?
- What do lenders think?
- How will lenders view my tax returns?
- Low Doc options
- Which loan types are available?
- How much can I borrow?
- Apply for a home loan
How long do I need to be self employed for?
The majority of lenders require you to be self employed for at least two to three years however some can consider people who have been self employed for only one year!
If you have been working one year or more, speak to us today on 1300 889 743 or enquire online to find out how you can get approved for a mortgage.
What if I’ve been self-employed for less than a year?
If you have been self employed less than one year there aren’t many options.
One of our lenders can approve loans for people who have been self employed for between one and two years as long as they have been in the same line of work for some time and have at least one years financials for your new business.
A good example of someone we can help would be a plumber with his own business that has been operating one year who was previously employed as a plumber for five years.
If you are concerned that your employment situation may make you ineligible for a home loan, please call us on 1300 889 743 or enquire online. We specialise in helping self-employed people get mortgages with great rates!
Which lenders can help?
Banks and other lenders treat self-employed borrowers in different ways! For this type of situation banks are more helpful then securitised non-bank lenders. Non conforming non-bank lenders may also be able to help.
How do lenders calculate my income?
Most lenders believe that by looking at your past tax returns they can predict how stable your business will be in the future.
Banks and non-bank lenders alike tend to be very wary if you have an income that has increased or decreased by a large amount in the last two years.
- One lender may use the lowest of the income figures for the last two years.
- Another may use the most recent year’s income as shown on your tax return.
- Some may even average the two years income or take 120% of the lowest years income.
As you can imagine this makes a big difference to your loan application! Importantly, every lender will interpret your tax returns in a different way and may look at your skills as an entrepreneur, your experience in the industry and the risk profile of your industry to determine how to assess your income.
Depending on your situation, we may pick and choose which information to provide to help prove the highest possible income. If you can provide them, then we may ask for Business Activity Statements (BAS), An Australian Taxation Office (ATO) tax portal printout or bank account statements for the last three to six months showing your turnover.
We specialise in finding the lender that will look at your documents most favourably!
Please contact us on 1300 889 743 or enquire online and we can help you find the right lender who will assess your income in the best possible way!
What do lenders think?
Lenders have the view that self employed borrowers represent a higher risk because their income is not as stable.
Some banks even view those in the construction industry less favourably then those from accounting firms. This is simply because banks have seen higher levels of default over the years from particular industries so tend to be more conservative when lending to them.
At one time a leading mortgage insurer even refused to approve low doc loans for builders! As you can see the banks complete a more thorough assessment of applications from business owners.
Luckily we can help!
Unlike most major banks, we know that there are also hundreds of thousands of businesses Australia wide that have been trading profitably for years.
It just isn’t fair to paint them all with the same brush!
We know which lenders treat self-employed people more favourably. Contact us on 1300 889 743 or enquire online for expert advice on your loan!
How will lenders view my tax returns?
When a credit officer working for a bank receives your tax returns on his desk he will check to make sure they are signed and certified and backed up by notices of assessment. This is a simple fraud check to make sure that these are the tax returns you lodged with the ATO.
Next he will usually look at the last two years taxable incomes and add back any unusual expenses such as one off losses.
Did you know some lenders will add back extra super contributions and even depreciation?
This is then where the banks really show a large difference in the way they read your tax returns! Banks will also have different documentation requirements depending on if you are a company, trust, partnership or sole trader. They may ask for interim financials or cash flow projections depending on the nature of your business and risk of your application.
To find out more, or to speak to one of our expert mortgage brokers about applying for a home loan, please contact us on 1300 889 743 or enquire online.
Low Doc options
Most lenders these days will allow you to not submit tax returns or financials if you sign a declaration confirming your income.
The lender can then assess your loan using the declared income.
Although most lenders do not charge a higher rate for low doc loans they may charge your Lenders Mortgage Insurance (LMI) as a one off fee when the loan is set up.
This fee is usually charged for loans over 60% of the property value.
Company home loans
If you are borrowing in a company, trust or partnership then you may get referred to business banking. Avoid this at all costs!
If you have a residential property as security then why should you pay a higher rate and higher fees just because you are borrowing in a company? Your loan may be a business loan, however the risk to the lender isn’t any higher than for a standard mortgage!
Some of our lenders will approve company home loans and trust home loans at standard residential rates.
You may have to pay slightly higher fees so that the lender can draw up more extensive loan documents which encompass a personal guarantee from the directors.
For more information or to apply for a loan, please contact us today on 1300 889 743 or enquire online. We can help you get approval!
Which loan types are available?
All loan types: Professional packages, basic loans, lines of credit, fixed rates.
How much can I borrow?
You can borrow up to 95% of the property value.
What can I use the loan for?
Home / domestic use, investing, purchases, refinances and construction are all acceptable loan purposes. Business purposes are acceptable for some loans types & lenders.
Who this loan is for?
Finance is available for self employed borrowers operating either as a sole trader or through a partnership, company or trust. Investors operating through a company or trust also fall into this category.
Who this loan is not for?
Normally employed applicants.
Professional package and basic loan discounts are available.
All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, extra repayments.
Apply for a home loan
If you are self-employed and looking to get finance, please speak to us!
However, keep in mind that it is best to apply for a home or investment loan when you feel your business is stable.
This is something that both us and the bank cannot assess, you would need to determine this for yourself.