Home Loans for the self-employed

Being self-employed might add a few more stages to the home loan application process, making it more difficult. These typical roadblocks and their remedies can help you enter your homee more quickly.

The information you must provide when applying for a home loan might differ between lenders. However, the following list of common needs should serve as a reference for you when you submit an application for a mortgage:

Proof that your ABN has been registered for at least 2 years
Last 2 years’ personal and business tax returns and tax assessment notices
Balance sheet and profit and loss statements covering the most recent 2 years
Details of any external liabilities: leases, hire purchase, overdrafts, company loans and/or guarantees
Last 1 month’s business bank statements

Due to the perception that a self-employed person's income structure is not as consistent than that of someone with a PAYG job, self-employed house loans are subject to this criterion. In order to comprehend the seasonal fluctuations that occur and provide more assurance to your cash stream, lenders like to acquire at least two years' worth of financial data from your company.

However, If you are self employed for under 2 years, there are some solutions available to you to get a home loan. If you do not have 2 full years of experience operating your business, lenders may require you to at least work in your industry for longer than two years and provide old payslips and references from former employers. This can be used to identify your work and income history prior to starting your own business.

Home Loans for those self-employed for under 2 years

Low Document Home Loans

Self-employed borrowers who are unable to provide the usual evidence of income necessary for regular house loans are suitable candidates for low documentation (low doc) loans.

Due to the streamlined income declaration form and use of non-tax returns as proof of income, minimal doc loans are advantageous to the applicant. It's vital to understand that this loan type requires alternate sources of income verification; it does not need less proof of income.

Although a low-doc loan can be a helpful tool for self-employed borrowers to apply for a mortgage, the additional risk perceived by the lender may result in a higher-than-average interest rate and more restrictions on the maximum loan to value ratio (LVR).

However not all lenders offer low doc loans.