SELF EMPLOYED HOME LOAN
People who are self-employed have a tougher time getting approved for a mortgage. Banks are looking for financial stability. Talk to us at Mortgage Broker Revesby to help you get your home loan over the line.
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Key issues
Been in business for 18 months. Your business grew quickly - most banks will require 2 years returns and assess on the
lower year. Thankfully, some lenders assess
your growth on the last years returns.
Your accountant has been cleverly showing a lower profit. This hurts your borrowing
capacity. You can either go for a low doc loan
or go back to your accountant.
How will the bank assess you?
More than 2 years tax returns are key. Banks want to see you are experienced in your field. If your business is less than 2 years old, offer your PAYG summary from the years you conducted the same work as an employee. You must build your case. Tax returns will be scrutinised by the bank to see how much you really earn. Some lenders use the lower earning year whilst others use the most recent. Must utilise the lenders that play to your strengths. The lender will forecast your earnings to figure out if your business is growing and your income is stable. Lenders tracks industry trends. If your industry is expected to do well this will give you a boost. Unfortunately the reverse is also true. So once again utilise the lenders who like your industry.How can I strengthen my case?
To present yourself in the best light to a lender you must go over your tax returns:
Make sure your tax return comes with a notice of assessment so the lender can check the signatures and certifications match. They will then review your expenses. This is where you can highlight expenses that are not reoccurring and may be "added back" into your income for the purposes of assessing your loan. Extra contributions made to your super. Interest paid on a loan or depreciation. Profits you leave in the company. Income distributed to others through a trust. One-off expenses not in other tax returns.If you are going to secure the loan with the property, then try and avoid a business loan. It is weighed down with extra checks and a lot more fees. And it really doesn't benefit you.
If all else fails, what about a low doc loan?
Your borrowing capacity will be lower and you will trigger Lender Mortgage Insurance, which could run into the tens over thousands. The lenders will charge you higher interest rates and more establishment fees. You will still need:
Business Activity Statement (BAS) for the last 12 months. A letter from your accountant confirming your income. Potentially more than 2 years tax returns going back as far as possible. Profit & loss statements.Contact us
I'm here to help.
Free service.
Matthew Stack - mortgage broker.
matthew@mortgagebrokerrevesby.com.au
0423 237 242
#mortgage #selfemployed #mortgagebroker #mortgagebrokerrevesby #mortgagebrokersydney
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