May 26, 2017
When it comes to being self-employed you should be prepared to jump through more hoops than your average borrower. Your options for lenders is also limited but it is definitely possible. Here are some things to consider if you are looking to get a home loan.
Taxable income is the key
The bank will calculate your income based from your taxable income for the last 2 financial years. This means you could run into trouble if your business is new and has not started generating much profit yet or your accountant is too good at reducing your taxable income. Most lenders will take the lower of the two most recent years and work from that while some lenders allow you to average the 2 years. Low taxable incomes may make getting a loan harder but not necessarily impossible.
Be honest with you broker
The key to getting your application approved is honesty with your broker. We can only go off the information you provide to us but the lenders have access to a lot more information. All lenders have different policies and 1 aspect of your financial position could make a big difference in which lender you should be going with.
Be prepared to prove your income
All loan applications but when you are self-employed you will be required to provide more than 2 payslips. All lenders will at least require your last 2 tax returns and notice of assessment. However, depending on the structure of your business and the lender you choose you may need to provide extra information such as company tax returns, financial statements, invoice books, bank statements or bas statements.
Go the distance in your business
Be prepared that more often than not a bank will not even look at your application if you have been self-employed for less than 2 years. This is because you need to be able to prove a steady income to the bank. Occasionally you can submit an application before the 2 years but you will need at least 1 tax return and a lot of supporting documents to be considered.
It is always best to seek the advice of a broker when looking to get a home loan especially if you are self-employed. We here at Mortgage Choice in Springwood pride ourselves on our knowledge of our lenders to get you the best deal possible. Come and meet with us today!