What loan option is available for a self-employed borrower?
What loan option is available for a self-employed borrower?
G’day everyone! I am looking to buy a house worth $550,000 and I need to borrow around $490,000. I run my own little coffee shop and it is 20 minutes away from the Sydney airport. I used to work for a well-known fast food chain before I opened this coffee shop. So basically what sort loan option is available for a self-employed person like me?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: What loan option is available for a self-employed borrow
Hi and welcome to the forums Cassie,
Loan applications received from self-employed tend to be assessed with more caution especially if they have only recently started their own business. This is because new businesses usually have more financial uncertainty and the applicant does not have tax returns to prove their income.
As a result, majority of lenders may require you to be self-employed for at least two to three years before approving the home loan. However, there are some who may accept loan application from people who have been self-employed for only one year.
Based on the income evidence you can provide to the lenders, you can either apply for a full doc loan or a low doc loan.
Cheers,
Otto
Loan applications received from self-employed tend to be assessed with more caution especially if they have only recently started their own business. This is because new businesses usually have more financial uncertainty and the applicant does not have tax returns to prove their income.
As a result, majority of lenders may require you to be self-employed for at least two to three years before approving the home loan. However, there are some who may accept loan application from people who have been self-employed for only one year.
Based on the income evidence you can provide to the lenders, you can either apply for a full doc loan or a low doc loan.
Cheers,
Otto
Re: What loan option is available for a self-employed borrow
In what situation would a low doc loan be more suitable for me and what sort of income proof will I need to provide to the bank?
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: What loan option is available for a self-employed borrow
Hi Cassie,
You can apply for a low doc loan if you have a bad credit history and/or cannot provide evidence of your income. However, you would still be required some form of income evidence as per the Nation Consumer Credit Protection (NCCP) Act.
Any of the following form of document may be submitted as a verification of your income:
If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.
Cheers,
Otto
You can apply for a low doc loan if you have a bad credit history and/or cannot provide evidence of your income. However, you would still be required some form of income evidence as per the Nation Consumer Credit Protection (NCCP) Act.
Any of the following form of document may be submitted as a verification of your income:
- BAS statements from the last year showing a turnover of your business.
- Letter from an accountant.
- Business bank statements from the last three to six months showing a high turnover of your business to indicate its profitability.
- Old tax returns older than two years.
- Interim financial statements showing a high turnover.
If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.
Cheers,
Otto
Re: What loan option is available for a self-employed borrow
Well, to tell you the truth I have only started running the coffee shop since last December. It’s a relief that I can show the bank statement as a proof of income. Thanks so much for your help!
Re: What loan option is available for a self-employed borrow
Hi I have only been running my business for a couple of months. Could I receive a home loan to buy a house worth $500,000?
Please help!
Please help!
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: What loan option is available for a self-employed borrow
Hi totoro,
You can choose to apply with a lender who will look at your income from your previous job and take that as proof that you can afford the loan. However, you would still be required to meet certain criteria in order to have the lenders accept the income from your most recent job.
These criteria are as follows:
Cheers,
Otto
You can choose to apply with a lender who will look at your income from your previous job and take that as proof that you can afford the loan. However, you would still be required to meet certain criteria in order to have the lenders accept the income from your most recent job.
These criteria are as follows:
- Your business must be in a similar line as your previous job.
- Your business must be operating for less than 18 months old.
- You must show that your business is currently trading.
- Your business should preferably be in a service industry with low expenses.
- You must not be borrowing more than 80% of the property value.
Cheers,
Otto