I got declined by St George - Are there lenders that accepts 1 years' tax returns

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Deepak
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I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Deepak » Thu Jun 20, 2019 3:56 pm

Hi, my business did really well last year but the year before it was relatively new, so I spent a considerable portion of my income on growing the business that meant spending on training, HR and a bunch of capital assets. Essentially, I reinvested most of the business profits into the business only taking out living expenses. I applied for a home loan with St George and got declined (perhaps not the greatest timing). Nevertheless, are there any banks that accept 1-year tax returns?

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Otto Dargan
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Re: I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Otto Dargan » Thu Jun 20, 2019 4:58 pm

Hello Deepak. Welcome to the forums.

St George no longer accepts 1-year financials for self-employed borrowers. However, there are other lenders who do accept 1-year tax returns as income evidence/verification. In addition, many of our lenders allow small business owners to add back the full amount spent on capital assets to your taxable income as well. So, yes, there are a couple of good lender options for you.

Each lender has its own policy on how they calculate income for self-employed where there’s a huge disparity between the last two years’ income.
  • Some lenders may use the average of the two years’ taxable income or take 120% of the lowest year’s income;
  • While some may use the most recent tax returns;
  • Another lender may use the lowest of the income figures from the past two years;
  • Lenders may or may not allow add back expenses shown on your tax returns.

Depending on your situation, we’ll work out which information to provide to help prove the highest income; whether it’s through your BAS (business activity statements), ATO tax portal printout or bank account statements from the past three to six months.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a self-employed home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Deepak
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Joined: Thu Jun 20, 2019 3:50 pm

Re: I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Deepak » Thu Jun 20, 2019 5:55 pm

I was reading your page and it says mortgage insurance applies for loans above 80%, while another page says 60. Am I missing something here? Also, are LMI and risk fee basically the same?

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Otto Dargan
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Re: I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Otto Dargan » Thu Jun 20, 2019 6:43 pm

Hi Deepak,

Lenders Mortgage Insurance (LMI) typically only applies when the loan to value ratio is above 80% for standard full doc loans. If it’s a low doc loan then LMI or risk fee applies when borrowing over 60% of the property value.

Some lenders effectively self-insure their home loans, that means there is no third party insurer, however, you’ll still pay a risk fee instead of LMI. Just like LMI, risk fees tend to vary between lenders. Our mortgage brokers know which lenders have the most competitive LMI/risk fee for your low doc loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Deepak
Posts: 3
Joined: Thu Jun 20, 2019 3:50 pm

Re: I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Deepak » Thu Jun 20, 2019 7:26 pm

That’s great and all, but I would like some flexibility with my loan. In particular, I want to be able to refinance my loan to take advantage of better terms, interest rates etc?

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Otto Dargan
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Re: I got declined by St George - Are there lenders that accepts 1 years' tax returns

Postby Otto Dargan » Thu Jun 20, 2019 7:55 pm

Hi Deepak,

Once you have your two years’ financials showing the increased income you can refinance from low doc to full doc to get a sharper rate. Low docs are considered riskier by the banks as you’re only providing limited income evidence so, they tend to charge a slightly higher interest rate. Once you can provide the necessary documents required, you’re no longer considered higher risk so, you can qualify for a more competitive interest rate.

In order to qualify for a full doc self-employed loan, you’ll need:
  • Last two years’ financial statements (profit and loss and balance sheet).
  • Last two years’ business tax returns.
  • Last two years’ personal tax returns.
  • Last two years’ notices of assessment.
  • Last 6 months home loan statements.

There are more than just interest rate considerations to make, you’ll also need to look at the LMI premium, application fees, loan amount, and the income verification requirement. The key to getting a good deal is applying with the right lender.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for aself-employed home loan with alternative income verification.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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