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


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 that has 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, 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 that don’t have the two years of documentation ready to go for the bank, but can still afford repayments for a loan and want to get into the market relatively soon. For more information on alt doc loans, have a read of our article on them here.



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