signing home loan

It can be difficult to obtain a home loan when you’re self-employed. One of the main reasons being that you can’t prove your income. However, there are solutions to it. 

As a business owner, you know how keeping your accounts, finances and income stream on target is a daily challenge. There may even be bigger challenges, especially when you look into securing a home loan. The latter should not cause another money problem for you.

Smooth out the process of securing a home loan even when you’re self-employed by being prepared and taking the right steps. Here’s what you need to do:

Know Your Financials

When a lender considers your application to purchase a home, they’ll need solid income proof and a certain level of it. That shows your ability to make monthly repayments. 

You should prepare the necessary paperwork that validates your self-employment for a steady period and that you earn a regular income every month. It can get difficult to gather all the needed documents and prove your income when you’re self-employed. 

So, you may use alternative documentation, such as the Low Doc loan, which serves both self-employed individuals and small business owners. It means that you no longer need to provide two years’ worth of financial statements and tax returns to qualify for a mortgage. 

However, you also need to remember that low doc loans attract higher interest rates, fees and charges than standard home loans since the lender is exposed to more risk. Still, it does let you buy your ideal property at your preferred time. 

Alternatively, you may also look for a standard home loan that only requires your most recent year’s tax return instead of the last two years.

Be Transparent

It’s important that you be transparent with the ups and downs of your business when you acquire a home loan. That’s important, especially if your taxable income has substantial fluctuations on your yearly business statements from one year to another. 

Being transparent lets you avoid issues in the future, especially when you face them even before you’ve applied for a home loan.

Prepare Your Income Statement

Taxable income can be a challenge to both self-employed individuals and small business owners. So, it’s crucial to think about your business statements that may directly affect your future borrowing options. It’s best to have a professional handle this matter and work out your objectives. 

Plan Out Your Cash Flow

If you’re a self-employed individual, use a financial plan to make out the best of your cash flow. Paying off outstanding debts like credit cards and personal loans can positively affect your cash flow and creditworthiness. Both will make lenders look favourably on your application and will more likely approve it. 

Conclusion

These ideas should help you in planning your self-employed home loan application. You may also use them to look for alternatives to break into the property market as self-employed or small business owners. Ask a professional about your options in acquiring a home loan in the fastest way and with the best rates possible. 

Wealthy You is an Australian mortgage company in Sydney, providing clients with various mortgage solutions tailored to meet specific financial needs. As an alternative lending specialist, we make refinancing your home simple. We are Sydney’s best mortgage lender for the self-employed. Get in touch with us today to get approved fast!

 

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