Self-Employment & Mortgages

Getting a mortgage when you are self-employed
Applying for a home loan as a self-employed person can be a confusing proposition when you realise the different requirements of each lender. As an applicant who is self-employed you may be seen as higher risk, but it’s important to remember the three essential numbers a lender is trying to ascertain – whatever your employment situation:
The amount you
can borrow
Your deposit
Reliable income
for repayments
What to expect f you have been
Self-Employed For +2 Years
What the bank is looking forWhat you’ll need to provide
Your taxable income, rather than your gross turnoverLenders will want to see your last two years of personal and business tax returns, including notice of assessments
Potential add-backs to credit your incomeYour business expenses that are not part of regular business e.g. depreciation on taxable assets, additional super fund contributions, deducted interest on business/personal loans etc.
A future income estimateThis varies between lenders, from providing your most recent tax return to a complete history of your self-employment. You may also need to include a cash flow projection
What to expect if you have been
Self-Employed For <2 Years
What the bank is looking forWhat you’ll need to provide
A proven history in your industryFor example, if you are a plumber who has been working for themselves for less than 2 years the lender will look to see that you have experience working as a plumber before moving to self-employment
Payslips from previous employmentPayslips help lenders ascertain that in the event your self-employment is unsuccessful, they can assume you would be able to return to the workforce in a similar job at a similar salary
What to expect if you apply for a
Low Doc Mortgage
What the bank is looking forWhat you’ll need to provide
Risk mitigationLenders will often require large deposits and offer higher interests rates to mitigate any risks they take
Minimum documentationAlthough Low Doc, lenders still want some key criteria before making an approval including; an ABN, a Business Activity Statement (BAS) for the last 12 months, a clean credit history and a history of at least 12 months of being self-employed

If you’re self-employed, variation between lenders, their criteria and documents you need to provide can be overwhelming. As experienced credit advisors, we can help you determine which lender is right for you and ensure your application ticks all the boxes. Let us know how we can help here.