Getting a loan when you’re self-employed

Getting a home loan can be an arduous process for anyone. Along with finding a lender you can trust, plus weighing up the different home loan options at your fingertips, there's also all the various documentation. 

A lender needs to know the intimate details of your finances before they're ready to approve a loan to you. This involves seeing the paperwork on your earnings, your credit history and even how often you've been employed and when. Only by perusing this information can they be sure that you'll be able to pay their money back.

The trouble with being self-employed

Unfortunately, if you're self-employed, then this process made a little more complicated. Documents like financial statements or tax returns may not be as easy to get a hold of if you're your own boss, putting your hopes of purchasing your own property into jeopardy.

Not only that, but the nature of being self-employed tends to make lenders wary about your finances. A new business may have many expenses in the early going that are one-time only. For a lender assessing your finances, however, these could appear to be regular and ongoing costs. That's why it's important to be open about the details of your business to your lender or broker, in order to offset any concerns they might have about your finances. 

Low doc loans to the rescue

A low doc loan is essentially a home loan for self employed people. As the name suggests, there's less documentation you have to deal with, making it perfect for those who own their own business. 

Typically, the only documentation you need to provide is a Borrower Certificate of Income Declaration Form, a year's worth of Business Activity Statements and, if possible, tax returns. You may also get asked for a letter from your accountant and evidence of any other loans you're currently carrying. 

If you're self-employed, this is the option you'll want to look at with your home loan provider.