You’ve decided that the time is right to buy a home, but you’re self-employed and you’re not really sure how that affects the home loan process for you. You know that you’ll likely have to jump through more hoops than the average home buyer, but exactly what does that mean?What do you need to do to get a self employed home loan?
What are Self Employed Home Loans?
Generally speaking, if you’re self-employed, you’re more than likely going to be applying for what is referred to as a low-doc home loan. Simply put, this type of mortgage doesn’t have the same requirements that a standard home loan would in terms of the paperwork you need to provide. These types of loans are not as common these days, due to the nature of the Australian lending market, but there are still plenty of options available to you if you’re self-employed, such as a fixed or variable rate home loan.
If you’re applying for a self-employed home loan, you know you don’t have access to the same financial and taxation information that a person who is employed would have access to.
What Documentation is Required?
While you may not have to provide the same documentation as a standard borrower, you will still have to provide some information to verify your income. The following is just some of the documents you’ll need to have access to when you’re applying for your home loan:
- An income declaration form
- A copy of your recent business activity statements and tax returns (if you have access to them)
- Your ABN or ACN proof (registered for more than two years)
- GST registration
That last point is important. You can register for GST at anytime but you MUST register for GST if your business is expected to have a turnover of $75,000 or more per annum.
Lenders are looking for different types of confirmation of income, so the more details you can provide to show your income, the better.
Let’s look at these requirements in more detail:
- Income: Depending on the lender, you might only have to provide an income declaration, while other lenders will require two years’ worth of financial statements. These could include your tax returns, BAS statements as well as profit and loss details. The more information you can provide, the better.
- Assets: Because you won’t have access to the same documentation that a standard borrower would, lenders may want to see what types of equity and assets you have at your disposal. This could mean showing bank statements to confirm savings and other investments you might have.
- Credit History: In some cases, you might have to provide the past three months worth of statements for your business credit cards, transaction accounts plus invoices issued and received. The lender will want to see what your cashflow is like and how you handle all of your financial commitments as a self-employed person.
To ensure you put your best foot forward, chatting with a qualified accountant is your best option. Chat to someone who is local and understands your business and can help you develop a strong case for applying for a self-employed home loan.