🤔 How to overcome the challenges if you are self-employed and want a home loan

 

Firstly, owning your own business you’ll know all about the challenges of admin – keeping your accounts, finances and income flow all on track. It’s not easy. The last thing you need is a ‘no’ on your home loan application because of the paperwork.
But here’s some good news if you’re self-employed and want a home loan.

There are alternatives.

self-employed and want a home loan

Here are four steps if you are self-employed and want a home loan.

💪🏻 1. Sort out the paperwork

When mortgage lenders are looking at a home loan application if you are self-employed and want a home loan, they are usually looking for a regular level of income that shows them you’re able to make the proposed repayments. Therefore, start by preparing paperwork that proves you’ve been self-employed for an ongoing amount of time and that you do earn a regular amount each month. Being able to demonstrate these things to them will help build your case.

An Alt Doc Loan might help when you are self-employed and want a home loan.

Given that it is sometimes a bit of a challenge to provide all the paperwork being that you are self-employed and want a home loan, you need to document your income, some lenders have worked out a different process for it – it’s called alternative documentation (Alt Doc for short).
This is specially designed to meet the needs of those who are self-employed and want a home loan. Business owners who can’t provide the income documentation required by traditional lenders and mortgage insurers but can still provide valid information, can still get a loan, just with different types of paperwork.

Use a broker as they have access to many major non-bank lenders who consider Alt Doc applications for those who are self-employed and want a home loan.

Some of the things they look for are:

  • At least 6 months ABN registered
  • GST registered for at least 6 months
  • (BAS) Business Activity Statements, and/or
  • Business Bank Account Statements, and/or
  • An Accountants Letter.

💪🏻 2. Be smart with your cash flow

If you are self-employed and want a home loan you need to keep your cashflow in check and your finances on track.
Using a financial plan to manage cash flow can be really good for people who are self-employed. Paying off any outstanding debts such as credit cards or personal loans will positively impact your cash flow, and potentially your credit score, which may also mean you’ll qualify for a higher loan amount with some lenders.

💪🏻 3. Be up front with your broker

When it comes to being self-employed and wanting a home loan, you need to trust their experience.
Importantly, from the get-go, it’s really important to be upfront about what’s been going on in your business. This is essential when there are any large variations up or down in the taxable income. Alternative lenders have experience with a wide range of borrowers specializing for those who are self-employed and want a home loan and are very familiar with evaluating the particular cash flows of small businesses.

💪🏻 4. Tackle the taxable-income dilemma

Get good help and solid advice if you are self-employed and want a home loan. One of the biggest challenges self-employed people and small business owners face is their taxable income. The thing to think about when you address this question for your business is how your financial statements today will impact your borrowing options in the future.

Talking to a financial adviser and tax professional about your goals (like buying a house) when you are working out your taxable income is an important step. These are some ideas to help your loan application planning. The good news is, there are many options available for self-employed people who are looking to get a home loan.

If you’d like more information talk to us today about how we are able to put you with the right lender for YOUR situation to avoid a ‘no’ to your loan application.

P.S. Here is a great article on how to improve your chances of getting a mortgage. A quick read with lots of valuable tips to give yourself the best chance of getting or refinancing a loan. 💪🏻

For information about a loan that may be suitable for you, call us on 08 71110022 or email us here.

Arthur Panagis
Author, Founder, Wealth Coach and Financial Strategist

B.Bus (Accountant)
Grad Dip (Financial Planning)
Professional Certificate in Self Managed Super Funds
ASX Listed Equities Accreditation
Tax (financial) Advisor

 

 

 

 

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Disclaimer: This article is factual information only. It is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice please consult a licensed financial or tax adviser. The information in the article is reliable at the time of distribution, but may not be complete or accurate in the future.

 

 

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