What are the mortgage options like for a self-employed baker?

Any general questions you might have in regards to loans and finance.
Riley
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Joined: Fri Aug 30, 2019 7:47 pm

What are the mortgage options like for a self-employed baker?

Postby Riley » Fri Aug 30, 2019 7:55 pm

I run a small bakery and earned a net profit of $55k from my business last year. I have been running the bakery for the past 3 years I am hoping to buy my first home. What are my mortgage options like as a self-employed baker? My business was off to a rocky start and did not earn a considerable profit for the first one and a half years.

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Otto Dargan
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Re: What are the mortgage options like for a self-employed baker?

Postby Otto Dargan » Fri Aug 30, 2019 7:58 pm

Hello Natalie. Welcome to the forums.

Low doc home loans might be the perfect option for you. These home loans are specially designed for self-employed borrowers who are not able to provide traditional income evidence 2 years' tax returns.

Most self-employed borrowers will normally require a valid ABN that has been running for at least 2 years and is registered for GST.

Please note that low doc does not mean you provide less evidence of your income. Low doc lenders will accept other alternative sources from any of the following:
  • 12 months BAS statements that show your business turnover
  • An accountant's letter/declaration verifying your income.
  • Business bank statements showing a high turnover
  • Tax returns of over 24 months
  • Interim financial statements.
Some lenders do not require two years of tax returns or financial statements. In your case, since your bakery is doing well now, you can opt to show financial statements, business tax returns, personal tax returns or notices of assessment for last year to show a favourable financial position.

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.

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

Riley
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Joined: Fri Aug 30, 2019 7:47 pm

Re: What are the mortgage options like for a self-employed baker?

Postby Riley » Fri Aug 30, 2019 8:03 pm

Thank you for your help. How much can I borrow with a low doc loan? The property I'm looking for is a bit pricey, but I do not have any personal debts and good credit history.

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Otto Dargan
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Re: What are the mortgage options like for a self-employed baker?

Postby Otto Dargan » Fri Aug 30, 2019 8:11 pm

Hi Natalie,

You can use the low doc loan calculator for more details whether you are eligible for a low doc loan.

Typically if you are borrowing up to 60% LVR you have no maximum loan amount! However, even when you are borrowing 60% for low doc loans LMI applies as its a higher risk to the bank due to the limited income verification requirements, you will have to pay Lenders’ Mortgage Insurance (LMI). This is insurance for the lender, allowing them to recover their losses should you default on your loan.

Please note that there are location restrictions for low doc loans. A majority of lenders are reluctant to lend to areas that are not prime regional or metropolitan locations.

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

Riley
Posts: 3
Joined: Fri Aug 30, 2019 7:47 pm

Re: What are the mortgage options like for a self-employed baker?

Postby Riley » Fri Aug 30, 2019 8:15 pm

Why and when do I have to pay lenders mortgage insurance?

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Otto Dargan
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Re: What are the mortgage options like for a self-employed baker?

Postby Otto Dargan » Fri Aug 30, 2019 8:23 pm

LMI does not protect you as a borrower or guarantor. A lender will not approve your loan if your application is too risky, so you don’t have a choice but to take out LMI if your lender requires it.

LMI works on a sliding scale depending on the loan amount and the Loan to Value Ratio (LVR) - percentage of the property value you are borrowing. It varies from state to state as governments charge stamp duty on insurance premiums.

You can use our online LMI premium calculator to find an exact premium for your situation.

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


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