More and more Aussies are choosing to be self-employed so they can have more control over their work lives. Being self-employed allows people to choose their hours, make all the decisions, and not have to report to a boss.
Unfortunately, being self-employed also comes with some extra challenges when it comes to borrowing money. For instance, being self-employed can make it much more difficult to get approved for a mortgage, but it's not impossible. There are many different things that you can do to make the process a little easier and increase your chances of being approved.
If you find it difficult to qualify for self-employed home loans, here are some things that could make it a lot easier for you:
What Documents Do Self-Employed Australians Need to Submit for a Mortgage Application?
When you are self-employed, there are certain documents that you will need to submit to apply for a mortgage. These include tax returns, financial statements, and proof of income.
1. Tax Returns
One of the most important documents you will need to submit is your tax return. This will show lenders how much income you have earned over the past year and help determine whether you can afford a mortgage.
2. Financial Statements
Another important document is your financial statement. This will show lenders your assets and liabilities and help them assess your financial situation.
3. Proof of Income
In order to prove your income, you will need to provide documents such as payslips, bank statements, and tax returns. These documents will show lenders how much money you have coming in and will help them to assess your affordability.
What Makes a Self-Employed Home Loan Different?
The most significant difference between a self-employed home loan and a traditional home loan is the way that your income is calculated. When you're self-employed, your income can fluctuate monthly, making it difficult to qualify for a traditional home loan. With a self-employed home loan, your lender will take your average income over the past two years into account, giving them a better idea of your actual earning potential.
Another difference is how your assets are calculated. Self-employed Australians typically have their assets tied up in their business, making it more challenging to qualify for a traditional home loan. With a self-employed home loan, the lender will consider the applicant's business assets as they will give them a more precise grasp of their financial situation.
The final difference between a self-employed home loan and a traditional home loan is how your taxes are calculated. When you're self-employed, your taxes are usually much higher than those for someone employed by someone else. With a self-employed home loan, your lender will have to take this into account, too.
Conclusion
Self-employed loans are an excellent option for people who want to start their own business or be their boss. The loan can be utilised for various purposes, such as buying equipment, inventory, or working capital. The terms and conditions of this loan are typically very flexible, which makes it a good option for people who may not qualify for a traditional bank loan.
Wealthy You is an Australian mortgage company that offers mortgage solutions in Sydney. Ask us about our self-employed home loans today!
