How to get approved for that loan when you’re self-employed

By Julie Ryburn
In Home Loans

As if self-employed people don’t already have many challenges. You must put aside your own tax, consider your own superannuation, pick the rates you charge and determine how many hours you need to put in each week to make ends meet. If that’s not enough, you’re often considered as high risk on behalf of lenders as you technically don’t have as stable an income on paper as PAYG applicants.

Though it can be more difficult, it’s not impossible to get a home loan as a self-employed person. We are strong believers that anyone with the dream of homeownership should be able to purchase a home, given they can meet the repayments and not put themselves into financial difficulty.

So, what are some ways a self-employed person can make their application more appealing to a lender? We have some tips!

Keep those records updated

Essentially what a lender will look for on an application is whether they can verify your income or not. By keeping track of your records and keeping them up to date, you’ll give yourself the best possible chance when it comes to approval of your loan. The types of records you should have are:

  • Business activity statements
  • Business transaction statements
  • GST registration
  • Income tax assessments and business tax returns

Track for two years

To increase your chances at loan approval, lenders will look more favourably on someone who’s been self-employed for two years or more. Though, it’s not impossible to get a loan if you’ve been self-employed for under two years. Sticking to a saving schedule in this time, get as big a deposit as possible and keep a record of all business transactions and tax in that time will give yourself the best chance of approval.

Consider an alt doc loan

What is an alt doc loan you ask? Essentially this means you may not have to submit all the above documents to a lender. Instead, you may be able to rely on a signed declaration of your income. These loans can then be assessed on your declared income. Meaning you don’t have to stress about finding all your docs from a year or more ago to prove income to the bank!

Although becoming less common in the industry, these types of loans are better for those without two years of documentation ready to go for the bank. Though they can still afford repayments for a loan and want to get into the market relatively soon. Luckily for you, we can help you get your foot on the property ladder with our very own Alt Doc Home Loan.

 

For more information on Alt Doc Loans, click here.

Disclaimer:

This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the article is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).

Please consult your financial advisor, solicitor or accountant before acting on information contained in this publication.

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