Alt-doc Loans: Helping the Self-employed Access Finance

By Julie Ryburn
In Home Loans

There are a great many upsides to running your own business. You have flexibility to decide the jobs you want to take and those you’d prefer to pass. You technically have unlimited earnings potential, and hopefully, you have a pretty decent boss.

One of the downsides, however, is that when you want to take out a loan, lenders would prefer to see proof of up to date income.

That’s where alt-doc loans come in.

What is an alt-doc loan?

Alt-doc loans were originally offered by non-bank lenders to cater for people who were self-employed or running their own business and who couldn’t provide the traditional up to date information lenders required.

As you might expect, applying for a home loan without being able to demonstrate proof of current income is not as straight forward as those people who are employed on wages. The good news is that some lenders are geared more towards helping people who are self-employed by offering alt-doc home loans – which as the name suggests involve having to provide alternative documentation.

Your broker can easily guide you through the process, which will include having to supply some or all of the following information:

  • Business name and ABN.
  • A Borrower’s Income Declaration.
  • Business Activity Statements (BAS) and/or an Accountant’s letter.
  • Details of liabilities and assets.

Alt-doc loans can often present a greater risk for lenders – after all, there may be less certainty (in theory, at least) than if you’re employed in long-term stable employment.

Lenders will usually require your ABN to have been registered for at least one year. In some cases, they may insist on being in business for a minimum of two years – something to consider if you’re currently employed but have dreams of owning your own business one day.

It is also important to bear in mind that, depending on your circumstances, you may need to pay higher interest rates and/or additional fees to take out a alt-doc loan, however, your broker will help you gather all of the evidence you need to put forward your best case.

Accessing alt-doc finance

The good news is that if you’re self-employed and have been doing so for at least one year, there are lenders who will consider your loan application.

Speak to your MoneyQuest broker today to find out how we can help.

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