Q. I’ve saved a decent deposit and am keen to get my foot on the property ladder, but I’ve already been knocked back from a few lenders because I am self-employed. Is there any advice you can give on how to get a loan if you are self-employed?
A. Unfortunately, the cold truth is, being self-employed can make getting a mortgage a little more difficult. This doesn’t mean it’s not possible, but you might just find it a bit more challenging than a salaried person would. This isn’t because lenders don’t like the self-employed, rightly or wrongly they’re just perceived to be a higher risk to loan money to.
Self-employed people may be in a range of different circumstances. Is the business a new start up, or has it been operating for a long time? Does the business make money, or is it short of cash? Without knowing these details, the best advice I can give is to go and speak to an experienced mortgage broker.
Mortgage brokers deal with people in all different circumstances every day. They are accustomed to helping self-employed people just like yourself, and they understand your needs and the needs of lenders.
The good news is that there are lenders out there who look on self-employed people in a better light than others; it’s just a matter of knowing who to speak to. There are also different loan types that may be more suitable to the self-employed, like Low Doc home loans.
This is where a good broker who understands the market can help. They will know who these lenders are and what criteria you’ll need to meet to get home loan approval, saving you stress, wasted time and the disappointment of rejections.
Your broker will advise what documentation he or she will need before your appointment, but at a minimum you should have ready:
- The last two years’ company tax returns and financials including profit and loss statements;
- The last two years’ personal tax returns; and
- Know how long you’ve had your ABN and GST registration, if applicable.
Do you have a question for John? Leave it in the comments below and check back each Sunday to see if your question has been answered!
If you found this article useful please share it using the buttons below.