Applying for a home loan can be tricky when you’re self-employed, but Aussie can help you get home loan ready
Are you your own boss (or dreaming of it) but feel like it’s holding you back from buying a home? Applying for a home loan when you’re self-employed can seem more difficult than it might be for a salaried person, but that doesn’t mean it’s impossible.
An Aussie broker can help you get your paperwork in order, understand your goals, and provide you with a range of lenders^ and products that you can choose from. At Aussie, it’s our job to help you navigate the maze of paperwork and find the right home loan for your individual circumstances — even if you’re self-employed.
There’s no getting around the fact that banks and other lenders will view your application differently if you’re a business owner or self-employed. If you have a job with an employer, a lender will only require your personal financial position to make a lending decision. When you work for yourself, your lender will also consider your business’ financial position.
If you are self-employed, banks and lenders may consider your income as ‘unpredictable’ and therefore consider you at much higher risk of missing repayments.
If you can show your lender that you’re a safe investment for them, you’ve got a better chance of your home loan being approved — there are just a few extra steps during your application when you’re self-employed.
Your Aussie broker can help you at every stage of the application and guide you with what paperwork you need to increase your chances of approval.
It’s always a good idea to find original copies of documents including past payslips, recent bank statements, and anything else which confirms your financial situation.
These are the basic paperwork requirements everyone should prepare before applying for a home loan;
If you’re self-employed and want to apply for a home loan, you also need to provide evidence of your business’ financial position. In addition to the same personal financial information as everyone else, self-employed people may also need to prepare some additional paperwork before they apply for a home loan such as:
What matters most is that you can demonstrate consistent income, business growth, and a long-term trend of increased earnings. It’s also important that your records are accurate so that you and your lender can both make the right decision for your circumstances.
Suppose you’re a builder who has only been operating and working for yourself for a year or so — but you’ve been working in the industry since you started an apprenticeship 7 years ago. In this case, you could try applying for what’s called a “low doc loan” (i.e. low documentation) — special consideration would be taken for being in the same line of work for many years, even if your books are relatively limited.
Keep in mind that due to responsible lending requirements, not every lender will allow low doc loans. If you’ve been in business for less than a year — even if you have plenty experience working for someone else — it is up to the lender’s discretion to decide on your loan application.
When the time is right and you have a more solid history of your business’ financial performance, you could consider getting in touch with one of our brokers to find the loan that’s right for you.
Applying for a home loan when you’re self-employed is all about having the right documentation and finding the right home loan products for your individual circumstances. A broker who understands the home loan process for self-employed people will know what criteria you need to meet, and can potentially save you from recurring rejected applications – which can impact your credit score.