Are you self-employed and worried about your ability to buy a home? It can seem more difficult applying for a home loan when you are self-employed compared to someone on a salary, but it is not impossible!
Please read on to see how you can achieve your goals to own a home when you are self-employed borrowers.
Why do mortgage lenders view self-employed borrowers differently?
If you are a business owner or self-employed, your home loan application will be viewed differently by lenders.
The reason for this is a lender will consider both your personal financial situation as well as your business’ financial situation. The lender may consider your income as less predictable than a person who works for an employer on a salary. You may be considered a higher risk for missing repayments due to your potential cash-flow irregularities.
An experienced mortgage broker can help you show your lender that you are a safe investment by guiding you through the application process and getting you approved for a self employed home loan.
What do self-employed borrowers need to show in their mortgage application?
If you are self-employed you will need to provide your lender with the following paperwork for your personal financial situation:
- employment details
- savings history
- outstanding loans (e.g. car or personal loans, prior home loans, credit cards, etc.)
- existing assets (e.g. real estate, cars, investments, superannuation).
You may also need to provide the following to show evidence of your business’ financial position:
- past two years of company tax returns
- past two years of other financial statements (e.g. profit and loss statements)
- past two years of personal tax returns
- date of ABN and GST registration.
You should provide original documentation wherever possible and provide information that demonstrates consistent income, business growth, and a long-term trend of increased, or consistent, earnings.
Recently self-employed borrowers have options
If you have only recently started working for yourself, say you are a carpenter or copywriter freelancer and you have been working in your industry for an employer for much longer, you still have mortgage lending options.
Some lenders offer what is called a “low doc loan” (low documentation). These lenders may give special consideration for being in the same line of work for many years, even if your self-employment status is relatively new with not much business paperwork.
Importantly, responsible lending requirements does mean that not every lender will allow a low doc loan, and it is up to the lender’s discretion to decide whether they will approve your mortgage application.
An experienced mortgage broker can help you understand your position, wherever you are on your self-employment journey and advise you the best way forward for getting into the property market.
Ready to apply for a self employed mortgage?
Applying for a home loan when you are self-employed is achievable when you have the right documentation and you find the right home loan lender and mortgage product for your personal circumstances.
The North Brisbane Home Loans team is highly experienced in helping self-employed borrowers navigate the home loan process. We can help you understand what you need to put your best foot forward to get your home loan approved and into a place to call your own.
Contact us today and let’s chat about how we can help you.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
