Self-Employed Home Loan

Are you your own boss (or aspire to be), yet it's preventing you from purchasing a home? Self-employed people may find it more challenging to obtain a house loan than salaried people, but this does not imply it is impossible.

Getting a house loan might be challenging when you're self-employed, but a mortgage broker can help you get your loan ready. A mortgage broker may assist you in getting your paperwork in order, understanding your objectives, and presenting you with various lenders and options from which to pick.

In this article, we will run you through why you should go straight to a mortgage broker when looking for a self-employed home loan.

They Understand That Your Finances May Be Unpredictable

There's no getting past the reality that your application will be treated differently if you're a company owner or self-employed.

If you have a job, a lender will simply consider your financial situation when making a loan decision. When you work for yourself, your lender will consider your company's financial situation.

If you work for yourself, banks and lenders may view your income as “unpredictable,” putting you at a higher risk of missing payments.

You have a higher chance of getting your house loan granted if you can convince your lender that you're a secure investment for them—there are only a few more procedures throughout your application if you're self-employed.

A mortgage broker can assist you at every stage of the process, including advising you on what papers you'll need to improve your chances of approval.

Preparing for Your Application

Finding original copies of papers, such as prior payslips, recent bank statements, and everything else that proves your financial condition is always a good idea. Before applying for a house loan, everyone should compile the following essential paperwork: 

  • Details about your occupation or business
  • A track record of your savings
  • Details on your outstanding loans such as a car loan, personal loans, prior home loans, credit cards, etc
  • Assets that already exist, such as real estate, motor vehicles, investments, superannuation

How Applications Are Different for Self-Employed People

If you're self-employed and want to qualify for a house loan, you'll need to show proof of your company's financial standing.

  • Self-employed people may need to prepare additional paperwork before applying for a home loan, such as:
  • Your company tax returns for the last two years
  • Other financial statements (e.g., Profit and loss statements) from the last two years
  • Personal tax returns from the last two years
  • The date of ABN and GST registration

You have a track record of steady earnings, business growth, and a long-term upward trend in earnings. It's also critical that your documents be up to date so that you and your lender can make the best judgment possible for your situation.

Can You Get a Home Loan Even If You Became Self-Employed Recently?

Assume you're a builder who has just been in business for a year or so but has been working in the sector since beginning an apprenticeship seven years ago. In this instance, you may apply for a "low doc loan" (i.e., a loan with minimal paperwork)—extra attention would be given to be in the same line of work for a long time, even if your books are limited.

Keep in mind that not all lenders will approve low-doc loans owing to responsible lending standards. Though you've just been in the company for a year—even if you've had lots of experience working for someone else—your loan application will be decided at the lender's discretion.

Conclusion

Getting a house loan as a self-employed person isn't impossible, but it can be difficult. However, working with a reliable mortgage broker can help make your application for a home loan easier.

Are you looking for a mortgage broker in Sydney? Wealthy You has years of experience in offering a variety of mortgage solutions. Get your mortgage application approved today!

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