If you’re applying for a home loan and you’re self-employed, you may have a bit more of a complicated process than someone who has a more traditional job. Lenders and home loan professionals may be less inclined to give you a line of credit.
Don’t worry though, you can still secure a home loan even if you are your own boss. Follow these tips to ensure you’re putting your best foot forward when applying for a home loan.
Seek Expert Advice
As with all home loans, it’s going to be to your advantage to consult with a professional, particularly one who specialises in dealing with the self-employed situations. Take some time to meet with an expert mortgage broker. Make sure you find out about the following things:
- What taxable income level you’ll need to apply for your loan?
- How much you can borrow?
- What kinds of loans are you eligible for?
For this third question, a professional will be able to determine if your business is generating the level of income that will qualify you for a loan. They’ll be able to let you know if you meet the minimum requirements and what you can do if you don’t.
Have Your Paperwork in Order
Lenders are going to want to see the following information from you:
- Your most recent personal tax returns from the past two years
- Your most recent business tax returns for the past two years.
- Your bank statements from the last two years.
Have this paperwork sorted and organised well in advance of meeting with your home loan professional. They’ll need to see this to confirm your income and to properly qualify you for your home loan.
Finding the Home Loan that Works Best for You
When discussing loan options with your mortgage professional, there will be a variety of home loan options that will suit your needs as a self-employed individual. Here are some loans you’ll want to become familiar with:
- Interest Only. This is best when you are an investor and want to optimise the cash flow on your investment property.
- Standard Variable Rate. This is a very popular loan, as it gives a lot of flexibility.
- Standard Fixed Rate. This loan is more popular with investors, because it has a fixed rate. Your repayments will not change over time.
- Low Doc Loan. In some instances, you could be eligible to provide minimal documents as part of your application process.
How long have you been self-employed?
If you’ve been self-employed for a short period of time, even less than a year, you can still get a loan. The mortgage broker may have to work a little harder on your behalf, but as long as you’re still in the same industry, you shouldn’t have a problem. Don’t worry if you’ve just ventured out on your own. There still are options for you.
When you buy a home, you’ll be learning about many options that can be quite overwhelming. That’s why its important to find a mortgage broker that has your best interests at heart, and has experience dealing with your particular needs as a self-employed person.
At Australian Credit and Finance, we can help you with finding the right loan for your needs. Get in touch with us today to discuss your self-employed home loan needs.