Self Employed Home Loans – How To Get A Mortgage
North Brisbane Home Loans has over 100 years of combined experience in securing home loans for self employed borrowers. We know that, as a self employed borrower, you won’t have the exact same paperwork on hand as the average person who works for an employer. We know that there are certain lenders who are more favourable towards self employed borrowers and others who may judge a self employed home loan application more severely. And we know how to present your circumstances in a way that will lead to a fair and accurate assessment of your application. If you run your own business and are looking to buy a home or investment property, talk to one of our self employed mortgage specialist.
Our team of self employed mortgage brokers understands that self employment is something to be proud of and we’re committed to helping self employed borrowers achieve their home loan goals.
What are the Benefits of Using a Self Employed Mortgage Broker for Home Loans?
With experience in running your own business, you may question whether you actually need a self employed mortgage broker. After all, you’re smart, savvy and you know how to do research, decipher paperwork and make big decisions. But when it comes to applying for a self employed home loan there are many benefits to partnering with a mortgage broker, which include
1. Presenting your application in a positive light
When it comes to applying for self-employed loans, it’s not just the information you present that’s important…it’s also how you present it. An experienced mortgage broker will know how to organise your business and personal financials in a way that is simple and easy to interpret. If necessary, they’ll even get on the phone and walk the loan assessor through your application step-by-step. This ensures that you don’t just get a mortgage approval, but that you get approved for the right amount to suit your true circumstances.
2. Preventing costly mistakes
Your mortgage application may be assessed by someone with very little experience in deciphering complicated tax structures and irregular income streams. As a result, you could end up paying a lot for someone else’s mistake. The most common issues that arise with a loan application for a self-employed borrower are double-dipping (where an expense is accidentally counted twice), misunderstandings surrounding company vehicles (forgetting about tax deductions), and avoidable delays (slipping your application into the “too hard basket”). An experienced broker can help prevent these mistakes from occurring.
3. Thinking outside the box
If you’ve googled ‘self-employed home loan’ then you’ve probably come across numerous recommendations for ‘Low Doc’ or even ‘No Doc’ home loans. For some self employed borrowers, this can be a good option. But it’s not necessarily your only option. Partnering with a mortgage broker will help you to think outside the box of ‘self employed home loans.’ Your broker can assess your unique situation and then make a recommendation based on what will best suit you – not just what would best suit ‘most’.
4. Having a loan set-up that suits you
Mortgage products can be structured in numerous different ways and can come with varying features attached. A mortgage broker will be able to help you structure your home loan in the way that best suits you and that will be most beneficial for your business. This could include cash-flow allowances and useful tax considerations. Retrofitting these kinds of details can be difficult and costly, so it’s worth getting things set up right from the very beginning.
5. Talking to someone you can trust
Mortgage brokers are regulated by legislation known as ‘Best Interests Duty’. In a nutshell, this means that a mortgage broker is legally required to assess your personal circumstances, do research and then make a recommendation about which loan product they think will work the best for you. In complying with ‘Best Interests Duty’, a mortgage broker will always act in your best interests. So, you can trust that a mortgage broker is telling you the truth and working hard for your benefit. ‘Best Interests Duty’ does not apply to banks, meaning that, should you choose to approach a bank directly, they are fully within their rights to act solely in their best interests.
7 Tips for Self Employed Home Buyers in Brisbane
As a self-employed person If you are seeking the best home loan then here are the top 7 self-employed home loan tips for home loan buyers in Brisbane, Australia.
Get into the habit of paying your bills on time
This may not sound that important but paying your bills, credit card or other loans late can have a huge impact on your home loan eligibility. In contrast, building up a history of consistent bill payments will help demonstrate to lenders that you’re conscientious, reliable and can be counted on when it comes to making repayments.
Get your paperwork in order
Nothing delays a self employed home loan application like disorganised or incomplete financial records. Start by making sure you’ve completed your tax returns for the past two years (both business and personal) and by arranging your financial records so that they’re easy to access and interpret.
Don’t over-complicate things
Most lenders prefer things to be simple and straightforward. If you have a lot of complex tax strategies or convoluted lease arrangements in place, then it could make things harder for you when you decide to go ahead with applying for a home loan. Wherever possible, keep things uncomplicated and presented in a way that is easy for your broker and then your lender to understand.
Do a credit check
A credit check is an important part of any mortgage application process since this will identify any potential red flags or possible errors on your record. Once you’ve obtained a recent credit report (you’re entitled to one free report every 12 months) then ask your mortgage broker to help you do a complete evaluation of the details. For more information on how to check your credit score, visit the Australian Government Money Smart website.
Talk to an experienced self employed mortgage broker
When it comes to applying for a self employed home loan, you don’t have to do things on your own. Talking to a broker who has plenty of experience in handling self employed loan applications will make things easier for you and will improve your chances of getting the best possible home loan to suit your specific needs. Your mortgage broker can give you tailored advice and make practical suggestions, even if you’re not planning to apply for several months yet. In fact, the earlier you talk to a self-employed mortgage broker about your plans, the easier the process is likely to be once you’re ready to move forward.
Be open to suggestions from your mortgage broker
Once your mortgage broker has fully reviewed your current financial situation, they can then start making recommendations. You may be surprised if they don’t suggest the particular product or lender that you had in mind but try to stay open to considering all your available options. For example, your broker may recommend that you apply for a low doc self-employed home loan. Or they may suggest a lender that you’ve never heard of before. Remember that your mortgage broker has years of experience in achieving desired outcomes and is working in your best interests. So, if they tell you something is a good idea, you can trust them!
Consider the timing of your self employed home loan application
After initial discussions with a self-employed mortgage broker, it may become clear that you would be better off delaying your mortgage application for a short time. If you’ve only recently started your business or if cash-flow is really tight then waiting a few extra months could make a big difference to the final outcome. You may find that holding off that little bit longer will result in your being eligible for a much lower interest rate or a more suitable mortgage product with a better range of features for you and your business.
Why Choose North Brisbane Home Loans?
5 Star Rating
We put you first and genuinely want to help you achieve your property ownership dreams with the best value self employed loans.
We have hundreds of happy customers, find out what they’ve said about working with North Brisbane Home Loans here.
Experienced Mortgage Brokers
With more than 90 years of combined experience in the industry, we can confidently offer you the best advice when it comes to finding the best home loans for self-employed.
We Work For You – Not The Banks
We don’t charge any fees for our self employed loan services, our commission comes from the lender.
So we’re by your side every step of the way to ensure you select the best self employed loans for your individual circumstances.
Exclusive Partner Network
Not only do we provide you with the best advice on your home loan needs, we also introduce clients to our network of trusted partners offering discounted rates.
Save time and money searching for reliable building and pest, real estate agents, solicitors and more.
5.0 Star Reviews from Self Employed Home Loan Borrowers
5.0 STAR REVIEWS
Frequently Asked Questions About Self Employed Home Loans
Will I have more trouble getting a home loan if I’m self employed?
It certainly used to be more difficult for a self employed person to get a home loan, but thankfully, this no longer has to be the case. Being self employed has become increasingly common in Australia, with 2.1 million registered business owners and 1.2 million sole traders. As a result, more lenders are coming to appreciate the unique situation that self employed borrowers find themselves in. The key difference in applying for a self employed home loan these days is that you’ll be asked to present your tax returns as proof of income, rather than paperwork from an employer. To give yourself the greatest chance of success it’s a good idea to team up with a broker who has experience in submitting self employed mortgage applications.
Is there a minimum amount of time I need to have been self employed before I can apply for a mortgage?
Most lenders prefer for a self employed borrower to have been in the same situation for at least two years (as this means they can provide two full years’ worth of tax returns). However, some lenders will consider applications from individuals who have been self employed for less than two years. These lenders specialise in helping shorter term self employed clients, however the deposit amount required is normally higher as is the interest rate.
I’ve only been self employed for one year – is it worth applying for a home loan?
If you’ve been self employed for less than two years then contact one of our brokers to find out what options could be available to you. Some lenders may assess your eligibility based on how long you’ve been working in a particular industry as opposed to solely how long you’ve been self employed. For example, if you worked as a mechanic for six years as an employee and you’ve now been working as a self employed mechanic for over a year, that may increase your eligibility in the eyes of some lenders. Other lenders may consider applications that come with a deposit of at least 20% of the property price. But individual circumstances will vary and the best course of action is to speak directly with a mortgage broker.
How will my income be assessed for a self employed home loan?
Most lenders will want to see your tax returns for the past few years, rather than proof of a weekly or monthly income. This is good news for self employed borrowers who may experience a more erratic income schedule. In some situations, a lender may also ask for BAS statements or bank statements.
What is a Low Doc loan?
Low Doc loans are a specific type of mortgage product designed for borrowers who don’t have a lot of the traditional supporting documentation typically requested by lenders. They first appeared on the mortgage market in the late 1990s and were offered by non-bank lenders to people who would struggle to qualify for a home loan based on the standard lending criteria. Low Doc loans gradually became more of a mainstream product, and today they are available from most of the big lenders, including the major banks. Low Doc loans can be a great solution for self employed borrowers, but they may also come with higher interest rates or require a larger deposit.
What are the most common application issues with self employed home loans?
Self employed home loan applications can encounter a range of issues, but the most commonly encountered ones include:
- A successful business with a clever accountant (where your business is performing better than it appears on paper).
- Applicants who have been self employed for less than two years continuously.
- Rapid expansion of the business (resulting in raised eyebrows and a lot of questions from the bank).
- Banks basing their assessment off the lowest figure shown in your tax returns, not the most recent.
If any of these situations apply to your business then don’t give up hope – many of these issues may be overcome by working with an experienced broker.
What should I know about add-backs?
As part of the overall assessment of your self employed mortgage application, a lender will take into consideration any unusual expenditures that don’t make up a regular part of your business expenses. This could include the interest you’ve paid on a business loan, depreciation on assets, company vehicle expenses or even additional contributions you’ve made towards your superannuation. Why are add-backs important? Because some lenders will ‘add-back’ the sum of these expenses to get a more accurate idea of your income – but others won’t. Correctly identifying and presenting add-backs can play an important role in determining whether or not a self employed mortgage application is approved.
My cash flow is a bit irregular – will this be an issue?
Don’t worry too much about irregular cash flow. Most lenders now appreciate the fact that when you’re self employed you’ll typically go through a cash flow cycle of feast and famine. This is why it’s important to have your tax returns in order – so that lenders can assess your annual income rather than a weekly or monthly income. But if you have experienced any major fluctuations in income then it helps if you have a reasonable explanation of why.
What else should I know about applying for a self employed home loan?
Applying for a self employed home loan doesn’t have to be stressful. It doesn’t have to be complicated. And it doesn’t mean you have to settle for higher fees and less competitive rates. Start by talking to a mortgage broker who has plenty of experience in working with people who are self employed. They can work with you throughout the entire process to ensure that you achieve the best possible result for your particular circumstances.