Self employed
An increasing number of people are self-employed, running their own business or contracting their services to other business. Often self-employed borrowers find meeting the lending criteria for standard home loans difficult, as income and savings are often irregular and can fluctuate more significantly than other borrowers.
Home loans for self-employed borrowers
For self-employed borrowers who can show proof of two years profitable trading, verify income and meet the remaining lending criteria, there is no reason you should not be able to secure a standard residential home loan.
For those not able to meet the assessment criteria for a full income verification loan, there is a range of home loans that have been developed specifically to address the differing requirements of self-employed borrowers, including low or no document home loans and non-conforming home loans. These loans are often available for both home buyers and residential property investors.
Assess your borrowing options
To assess your borrowing options, or for mor information on the home loan that is in your best interest, simply fill in the form below or call us any time on 13 LOAN (+61 2 9249 3739).
Interest rates for self-employed borrowers
Low documentation loans and non-conforming loans are often have higher interest rates, application fees and ongoing costs than full-document and standard home loans. The interest rate you are charged will relate to the lender’s assessment of your level or risk; it may be as much as 3% higher than the current standard variable rate.
Although your interest rate may be quite high to start with, a good repayment history can lead to lower interest rates and the opportunity to refinance to a standard home loan. Make sure you review your home loan after the first two years to see what is available to you. You may also be able to lower the interest rate you are charged by paying Lenders’ Mortgage Insurance.
Home loan features on low documentation loans
Many no or low-documentation loans offer all the features of standard variable and fixed-rate home loans, including flexible repayment options, redraw and 100% mortgage offset.
New lender requirements for self-employed borrowers
Some lenders have recently introduced an increased requirement for documentation prior to granting approval for a low documentation home loan. Depending on which lender you borrow through, you may now be required to supply:
- 12 months worth of Business Activity Statements (BAS)
- An Australian Taxation Office (ATO) Lodgement Reference Number
- Account statements for the past 3 months, showing taxation payments
Not all lenders require this documentation so talk to your local Loan Market mortgage broker for an overview of the options available to you.
How much can I borrow?
Most lenders will cap the amount a self-employed borrower can access, but this can be quite high – in some cases over $2 million. For a more complete assessment on how much you can borrow, talk to your local mortgage broker of call us any time on 13 LOAN (+61 2 9249 3739).
