Home Loans For Self Employed
When I talk to people enquiring about home loans for self employed people they always assume it’s really difficult which isn’t the case. Home Loans for self employed borrowers aren’t any more difficult then for people on a PAYE salary, it just requires more documentation to verify income. Being self employed shouldn’t deter you from borrowing to buy your own home. You just need the help of a good Mortgage Broker that will let you know up front all the things that are required so you can be well prepared.
SELF EMPLOYED INCOME
YOUR BORROWING CAPACITY IS CALCULATED ON THE INCOME YOU DECLARE TO THE ATO.
I understand you have a lot of things to claim and you want to minimise your tax bill but my advice is plan your property purchase and let your accountant know in advance that you will be looking to purchase a home in the next financial year. You will need to show your full amount of earnings. If it’s legitimate then they may be able to declare a higher income for you.
Your credit card/s Limit/s count and not what you owe on them. A high Credit Limit on your card or cards can reduce your borrowing capacity. You can think about reducing your limits though if the high limits aren’t necessary for day to day business when applying for your home loan.
FINANCIAL STATEMENTS – SUPPORTING DOCS
The benchmark for Self-Employed borrowers is to provide the lender with 2 years financials. This means tax returns for the company and individual or just individual tax returns for sole traders.
The Notice of Assessment is the first port of call for me with Self-Employed clients. If the income figure on this report shows an adequate amount to service the home loan required then it saves me time having to look closely at the tax returns.
If the figure on the Notice of Assessment isn’t enough then I’ll need to look closely at the returns for add-backs such as interest, super contributions, and depreciation. These add to your income you can use for servicing.
One or two Lenders are happy to provide home loans for self employed borrowers with just 1 Years Financial Statements under special conditions. Ask us what these conditions are…
The other docs required are the normal requirements for everyone such as ID and Bank Statements, Credit Card Statements etc….