Self-Employed

Are you your own boss (or dreaming of it) but feel like it’s holding you back from buying a home? Applying for a home loan when you’re self-employed can seem more difficult than it might be for a salaried person, but that doesn’t mean it’s impossible.

There’s no getting around the fact that banks and other lenders will view your application differently if you’re a business owner or self-employed. If you have a job with an employer, a lender will only require your personal financial position to make a lending decision. When you work for yourself, your lender will also consider your business’ financial position.

Having a professional negotiator and mortgage expert by your side (who specialise in this space) should be your first step. MJ Financial Chiefs deals directly with many lenders, we know how they work and we know how to find the most suitable home loan for you – without the sky-high interest rates.

A range of residential home loans are available, whether you’re:

• Operating as a sole trader, a partnership, company or trust
• Buying your first, next home, investing, or switching your loan to us (refinancing)
• Building a new home or buying an established property.

What do self-employed people need to prepare for a home loan application?

If you’re self-employed and want to apply for a home loan, you will need to provide evidence of your business’ financial position.

In addition to the regular personal financial information as everyone else, self-employed people may also need to prepare some additional paperwork before they apply for a home loan such as:

• last two years of company tax returns
• last two years of other financial statements (e.g. profit and loss statements)
• last two years of personal tax returns and Notice of Assessments
• date of ABN and GST registration.

What matters most is that you can demonstrate consistent income, business growth, and a long-term trend of increased earnings. It’s also important that your records are accurate so that you and your lender can both make the right decision for your circumstances.

How can I fund my ATO Notice of Assessment?

Your Notices of Assessment are in your MyGov inbox: for step-by-step instructions on how to find them, visit the Australian Government ATO site.

What if I only recently became self-employed?

Suppose you’re a builder who has only been operating and working for yourself for a year or so — but you’ve been working in the industry since you started an apprenticeship 5 years ago. In this case, you could try applying for what’s called a “low doc loan” (i.e. low documentation) — special consideration would be taken for being in the same line of work for many years, even if your books are relatively limited.

Keep in mind that due to responsible lending requirements, not every lender will allow low doc loans. If you’ve been in business for less than a year — even if you have plenty experience working for someone else — it is up to the lender’s discretion to decide on your loan application.