{"id":5500,"date":"2024-10-24T09:48:06","date_gmt":"2024-10-23T23:48:06","guid":{"rendered":"https:\/\/financialplus.com.au\/?p=5500"},"modified":"2024-10-24T09:48:06","modified_gmt":"2024-10-23T23:48:06","slug":"how-to-nail-a-home-loan-if-youre-self-employed","status":"publish","type":"post","link":"https:\/\/financialplus.com.au\/how-to-nail-a-home-loan-if-youre-self-employed\/","title":{"rendered":"How to nail a home loan if you\u2019re self-employed"},"content":{"rendered":"

\"\"It\u2019s the great Australian dream for many: giving the 9-to-5 grind the flick and running your own show. But when it comes to taking out a home loan, being your own boss can dish up some unexpected hammer blows.<\/strong><\/p>\n

Rightly or wrongly, lenders tend to see self-employed borrowers as a\u00a0higher risk compared to employees<\/a>. That\u2019s largely because, by and large, their income isn\u2019t as guaranteed.<\/p>\n

In addition, it\u2019s likely their earnings won\u2019t be the same each pay day \u2013 they may differ, sometimes substantially, from one month to the next.<\/p>\n

In a lender\u2019s eyes this has the potential to impact their ability to make regular loan repayments.<\/p>\n

So if you own one of Australia\u2019s\u00a02.6 million small businesses<\/a>, or you\u2019re one of the nation\u2019s\u00a0one million independent contractors<\/a>, here are some tips on how to convince a lender to back you.<\/p>\n

Show you\u2019ve been in business for a while<\/h3>\n

Banks often feel more comfortable if you have been self-employed for a while.<\/p>\n

That can mean showing you\u2019ve held your Australian Business Number (ABN) for at least a year or two. It demonstrates the business has got legs and possibly generates a reasonable income for you.<\/p>\n

Gather proof of income<\/h3>\n

While employees can simply stump up a couple of pay slips as proof of income, if you\u2019re self-employed you\u2019ll likely need to pull together several pieces of paperwork as evidence of income.<\/p>\n

The requirements vary between lenders.<\/p>\n

You may be asked to provide your last two years of financial statements, including business and personal tax returns (a good incentive to stay up-to-date with your tax!).<\/p>\n

Or the bank may just want to see several recent business activity statements.<\/p>\n

In some cases, you may be asked for an income statement signed by you and your accountant that confirms your financial position and that you can afford the loan repayments.<\/p>\n

With so much variation, it\u2019s important to speak with us to know what different lenders look for.<\/p>\n

Showcase your other assets<\/h3>\n

It\u2019s not a bad idea to gather evidence of personal savings and investments.<\/p>\n

A healthy track record of regular saving, in particular, can go a long way towards convincing a lender that you can handle home loan repayments.<\/p>\n

Don\u2019t hide your income or exaggerate expenses<\/h3>\n

The Australian Tax Office (ATO) estimates that about\u00a010% of small businesses<\/a>\u00a0under-report income (aka cash-in-hand jobs) or exaggerate\/overclaim expenses.<\/p>\n

Not only can this get you in hot water with the ATO, but it can also impact your borrowing capacity.<\/p>\n

That\u2019s because generally speaking, the lower your income, the lower the repayments a lender may expect you\u2019ll be able to afford each month.<\/p>\n

Low-doc loans for self-employed home buyers<\/h3>\n

You may have heard about\u00a0low-doc home loans<\/a>.<\/p>\n

These are purpose-built loans designed for self-employed borrowers who don\u2019t have sufficient documents to apply for a regular home loan, hence the name \u201clow doc\u201d.<\/p>\n

The beauty of low-doc loans is that they can provide a pathway into the property market.<\/p>\n

The downside is that with less proof of income, the bank may see you as higher risk. And that can mean paying a higher interest rate.<\/p>\n

The good news is that the higher rate may not apply for the life of the loan.<\/p>\n

If you build up a record of reliable loan repayments, the bank may let you convert your mortgage to a full doc loan at a later stage, potentially providing the savings of a lower rate.<\/p>\n

Not every lender offers low-doc loans. Talk to us to know which, if any, low-doc loans are suitable for your circumstances.<\/p>\n

Get the ball rolling<\/h3>\n

Borrowing to buy a home may involve a little extra effort when you\u2019re self-employed but it can be done.<\/p>\n

And if you\u2019ve created a successful business with a strong track record of generating a profit and income for yourself, the process can be straightforward and result in you landing a regular ol\u2019 home loan.<\/p>\n

The catch is that running your own show is likely to mean you\u2019re stretched for time to put the application together.<\/p>\n

If that sounds like you, give us a call. We\u2019ll help take care of your home loan while you\u2019re taking care of business.<\/p>\n

Disclaimer:<\/strong>\u00a0The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s the great Australian dream for many: giving the 9-to-5 grind the flick and running your own show. But when it comes to taking out a home loan, being your own boss can dish up some unexpected hammer blows. Rightly or wrongly, lenders tend to see self-employed borrowers as a\u00a0higher risk compared to employees. That\u2019s […]<\/p>\n","protected":false},"author":23,"featured_media":5501,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[110],"tags":[],"class_list":{"0":"post-5500","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-home-loans","8":"entry"},"yoast_head":"\nHow to nail a home loan if you\u2019re self-employed · FinancialPlus Mortgage Broker Gold Coast<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/financialplus.com.au\/how-to-nail-a-home-loan-if-youre-self-employed\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to nail a home loan if you\u2019re self-employed · FinancialPlus Mortgage Broker Gold Coast\" \/>\n<meta property=\"og:description\" content=\"It\u2019s the great Australian dream for many: giving the 9-to-5 grind the flick and running your own show. 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