Self Employed Home Loans
Self Employed Home Loans
Many Australians are self-employed (currently there are approximately 2.4 million self-employed workers and business owners). Small business owners and self-employed workers often have the greatest need to borrow money given their business and personal borrowing needs and may have trouble sourcing self employed home loans.
Unfortunately, it’s often these borrowers that find it the hardest to borrow money from banks and home loan lenders. Below we will briefly explore the lending requirements for self employed home loans, why many borrowers find this process difficult and lastly what we do differently at OAK Tree Finances to get a better result for you.
Ready to get started? Call a self employed mortgage broker from OAK Tree Finances today on 0404 403 066 and we’ll find the perfect home loan for you.
Lending Requirements for Self Employed Home Loans
Most lenders require an analysis of your last 2- or 3-years financial history. As documentary evidence they require completed tax returns, financial statements and the accompanying ATO notice of assessment. If there are some inconsistencies in the last few years then more recent history can also be requested such as bank statements, BAS statements, a letter from an accountant or even a forecast of your expected future income.
In simple terms lenders try to predict your future income by analysing this history. Ideally, they are looking for two consistent years which is why they sometimes prefer to see three years. If income is decreasing, then they may have concerns that the income won’t be reliable in the future. On the other hand, if the income is increasing too quickly then they may also have similar concerns. Sometimes it may feel like you cannot win.
Making this process harder is the fact that the rules that each lender use can change considerably. One lender may take the lowest of the last two years income and another may rely solely on income received last year. One lender may average the last two years income and another may take 120% of the lowest year.
Certain tax deductions such as depreciation or one-off expenses may be able to be included as legitimate income (EBITDA). Some Lenders may also consider industries differently for example, they may bend their rules and accept one year’s tax returns for an architect but for a cafe or building company that they consider higher risk they may want two years before they will approve a home loan.
Why is this process difficult?
Buying property can be one of the biggest financial decisions of your life. With hundreds of different home loan products in the Australian market to choose from it’s becoming increasingly difficult to find the right self employed mortgage loan to match your needs and circumstances.
What can we do differently at OAK Tree Finances?
Just as important as the numbers themselves can often be the story behind the numbers. For example, if the business has only been operating for a short time, what is the experience and background of the owner? If the business had one year that was worse than the other years, what was the reason why? These discussions often never take place with a borrower and no written explanation is provided to the bank to give them a proper understanding of the situation.
What we can do:
- We’ll take the time to understand your individual situation.
- We’ll provide detailed notes about your business to help self employed mortgage lenders understand your situation.
- We’ll will find the right self employed mortgage lenders and get the best possible outcome.
- We’ll provide transparent feedback about the likely outcome, so you know where you stand.
Self employed refinance loans
If you have an existing loan and are looking to refinance as a self-employed business owner, contact the team at Oak Tree Finances to see if you are eligible for self employed refinance loans. Our team of self employed home loans specialists will help find the right loan options and prepare the documents needed to apply for the best loan to suit you.