If you are self-employed and looking to buy a home, it is possible to do so, even though it may be more difficult than for someone who is salaried. Plenty of Australian brokers can help you organise your paperwork, understand your goals, and provide you with various lenders and products to choose from.
How Different Are Home Loan Applications for the Self-Employed?
Lenders and banks will evaluate your loan request differently whether you are a business owner or self-employed.
If you are not employed by someone else, a lender will need to take into account both your personal finances as well as your business finances when considering a loan. Your self-employed income may be considered uncertain, which could lead to a higher chance of not being able to make payments.
Demonstrating to your lender that you are a reliable option for their investment is a key factor in getting your home loan approved, and this can be a bit more difficult if you are self-employed. Your broker can assist in the entire process and will be able to explain what documents you need to provide to make your application more successful.
Application Requirements for Self-Employed Home Loans
It is wise to secure and store original copies of any documents demonstrating your financial standing, such as past paychecks, recent banking statements, and other related material.
Before applying for a home loan, you must ensure you have all the necessary paperwork ready. This includes information about your job, money saved, loans or debts, and any assets you own. You should have all of this information on hand to prove to the lender that you are a reliable borrower.
Proof of Income for Self-Employed Individuals
Suppose you're a freelancer or an independent contractor looking to purchase a home. In that case, you must demonstrate the financial stability of your business by providing documentation about your income, expenses, and other financial metrics.
Self-employed individuals will need to provide more detailed financial documents than those employed by a company when they apply for a home loan. This includes their last two years of business tax returns, two years of other financial statements such as profit and loss statements, two years of personal tax returns, and the date of their ABN and GST registration.
The bottom line is that lenders want to ensure that you can handle the loan and that you have the potential for success. To do this, they must be able to see that you have a steady income and that your business is steadily growing. Your financial records must be up-to-date and accurate so that you and your lender can make informed decisions.
Applying for self-employed home loans in Australia can be a complicated and lengthy process, but the effort is worth it in the long run. It is important to take the time to research and compare available loan products and plan and prepare for the application process in advance.
Additionally, potential borrowers should ensure they have the documents and information lenders require. Taking the time to understand the application process and gathering the necessary documents will make the application hassle-free and guarantee the best loan product for you.
Wealthy You is an Australian mortgage company servicing Sydney for almost a decade, offering various mortgage solutions to meet the specific financial needs of every client. As an alternative lending specialist, we can make refinancing your home simple. If you want access to the best self-employed home loans in Sydney, get in touch with us! We look forward to meeting you.