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How much can I borrow with a 120k BAS turnover?

Posted: Wed May 29, 2019 6:13 pm
by Duran
I’m an independent contractor (sub-contractor) set up as a sole trader. Previously, I worked as a PAYG employee with the same contractor till 2 years ago when I registered my ABN. The first year’s turnover wasn’t really great, but I’ve been steadily getting more work. I’m fully contracted for the next 12 months. My last year's tax returns show minimal income ($44,500) as such I can’t qualify for the amount I need for a mortgage. I want to use the last six month’s BAS to qualify for a low doc. How much will I be able to borrow if the last six months turnover was $128,000?

Re: How much can I borrow with a 120k BAS turnover?

Posted: Wed May 29, 2019 6:35 pm
by Otto Dargan
Hello Duran. Welcome to the forums.

There are a few lenders who accept 6 months Business Activity Statements (12 months BAS is preferred) as income evidence for a low doc loan.

The percentage point of your BAS turnover that lenders will consider as your taxable income will depend on what Loan to Value Ratio (LVR) you’re looking to borrow and the industry you’re in. Generally, 40% of the turnover is considered as your taxable income. However, for certain service type industries such as subcontractors, one of our lenders will use 70% - 90% of the BAS turnover.

In order to add strength to your low doc application along with BAS you’d need:
  • 2 years registered ABN (1 year ABN accepted)
  • 6 month’s Business Bank/Transaction Statements.
  • Some lenders may also ask for an accountant’s letter or declaration verifying your income.
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a low doc home loan with BAS.

Cheers,

Re: How much can I borrow with a 120k BAS turnover?

Posted: Wed May 29, 2019 7:37 pm
by Duran
That's great. While surfing the net, I came across an article which announced RAMS have stopped doing low doc loans. Am I looking at paying a higher interest rate because of this? What’s stopping the other lenders from jacking up their interest rates?

Re: How much can I borrow with a 120k BAS turnover?

Posted: Wed May 29, 2019 8:09 pm
by Otto Dargan
Hi Duran,

While it’s true that RAMS’ pricing and policy were excellent for low doc borrowers, there are still a lot of lenders that offer low doc loans. For some types of low doc loans, RAMS was the cheapest in the market and for others, they were not. So, it really depends on your situation as to if you will pay more or not. If you’re borrowing up to 80% of the property value then there are quite a lot of competitive low doc lenders available.

You can also compare low doc interest rates on offer from our panel of almost 40 lenders.

Cheers,

Re: How much can I borrow with a 120k BAS turnover?

Posted: Thu May 30, 2019 3:02 pm
by Duran
That looks very promising. I could probably get something from my accountant as well to that effect. Btw, what’s the difference between an accountant’s letter and declaration? Aren’t they the same?

Re: How much can I borrow with a 120k BAS turnover?

Posted: Thu May 30, 2019 3:28 pm
by Otto Dargan
Hi Duran,

Not exactly. An accountant’s letter is on the accountant’s letterhead and is signed and dated by the accountant and may have a disclaimer. Whereas, an accountant’s declaration is the lender’s own form and has figures that have to be completed by the accountant. Each lender has its own requirement and its own format. Some require a declared income from the accountant whereas others just need confirmation that you can afford the loan. Some lenders will not allow a disclaimer to be added by the accountant. Which option is most suitable for you will usually depend on what your accountant is willing to sign.

The goal is to go with a lender that has a method your accountant is comfortable with and that has great pricing and policy.

We specialise in self-employed home loans with alternative income verification documents.

Give us a call on 1300 889 743 or fill in our free assessment form to discuss your options.

Cheers,