Home Loans For Self Employed Borrowers – What’s Changed In 2020 COVID-19?
While the rules and regulations haven’t changed significantly for self employed borrowers wanting to borrow home loans, COVID-19 has certainly made it a little trickier.
Lenders are requesting additional income documentation to ensure your business hasn’t been massively impacted by the pandemic.
Some lenders have also placed temporary bans on certain industries such as retail, tourism, airlines, hospitality, and entertainment. However, if you can show consistent income your application may still be approved.
The main impact to self-employed borrowing due to COVID-19 is that some lenders are only allowing loan values of up to 80 percent of the property value.
How Much Can I Borrow As Self-Employed?
When it comes to the amount you can borrow, a self-employed borrower can usually loan up to 90 per cent of their property value. Although some lenders only allow 80 per cent now due to COVID-19 impacts.
Most loans are assessed on a case by case basis, so it pays to talk to your mortgage broker to work out how much you could borrow.
What Documentation Will I Need?
As a self-employed person in Brisbane, Queensland, you may need to submit the below-given documents to get qualify for a self employed home loan.
- Two years of financial statements including personal returns, company returns, and business profit and loss statements
- A Business Activity Statement (BAS) with periods from the most recent financial statements through to application date.
- Business bank statements
- Maybe a letter from your accountant projecting your income for the next 12 months
- A statement to outline the effect of COVID-19 on your business
Are Low Doc Options Still Available For Self Employed Borrowers?
Yes, low doc home loan options are open still for self-employed borrowers.
How To Improve Chances of Approval?
Lenders will ask you more questions on the impact of the coronavirus pandemic on your business.
By applying through a Mortgage Broker Brisbane, they will be able to navigate these questions for you and increase your chances of submitting the correct information and documentation. As it is often how a deal is presented that makes all the difference.
Our self employed home loans brokers at North Brisbane Home Loans are up-to-date with the latest lending policy changes for self-employed borrowers due to COVID-19
Frequently Asked Questions
LMI is an insurance policy that is designed to protect the lender if the borrower defaults on their home loan. Most lenders will require a borrower to obtain Lenders Mortgage Insurance if the LVR is greater than 80%. However, the First Home Loan Deposit Scheme (launched by the Federal Government) allows for a set number of eligible first home buyers to qualify each year for an LMI-free loan with a deposit as low as 5%.
Your next step should be to contact an experienced and knowledgeable broker with a proven track record of success. Why should you use a mortgage broker in Brisbane? Because approaching a single lender will severely limit your available loan options since they only offer their own products. In contrast, a Brisbane mortgage broker can compare a wide range of home loan offers and then help you to choose the right home loan to suit your individual circumstances.
A home loan offset account is a feature that is available on some mortgages. The offset account is an everyday transactional banking account linked to your mortgage. Why is an offset account beneficial? Because it can help to reduce the amount of interest you pay. Any funds that are deposited into the offset account are deducted from the total home loan balance owing BEFORE interest is charged. So, if you have a mortgage balance of $250,000, but you have $40,000 in savings in your offset account, you’ll only be charged interest on $210,000 instead of the full balance.
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.
