Lending to self-employed borrowers can often be complex and requires extensive knowledge of a lender’s requirements.
Full doc home loan Myth
Some self-employed borrowers assume that because they are self-employed, they have to apply for a ‘low doc’ home loan, with a higher interest rate and alternative documentation requirements. However, depending on your circumstances, you may not necessarily have to. To qualify for a home loan with the cheapest rates, most lenders will ask you to provide two years tax returns and financial statements. This includes your personal tax returns, company, partnership or trust returns and as well as tax assessment notices.
Be careful with paperwork
As a self-employed borrower, you will most likely have to provide more information than the average borrower. This may include tax returns, bank statements or even a declaration from your accountant. If you are able to be quick when providing these items, it will help speed up the application process.
Some self-employed borrowers assume that because they are self-employed, they have to apply for a ‘low doc’ home loan, with a higher interest rate and alternative documentation requirements. However, depending on your circumstances, you may not necessarily have to. To qualify for a home loan with the cheapest rates, most lenders will ask you to provide two years tax returns and financial statements. This includes your personal tax returns, company, partnership or trust returns and as well as tax assessment notices.
Be careful with paperwork
As a self-employed borrower, you will most likely have to provide more information than the average borrower. This may include tax returns, bank statements or even a declaration from your accountant. If you are able to be quick when providing these items, it will help speed up the application process.
File your tax returns on time
Lenders want to see your most recent income history. By keeping your tax returns up to date, you are able to show the lender your most recent income history whenever you are ready to apply for a home loan.
Lenders want to see your most recent income history. By keeping your tax returns up to date, you are able to show the lender your most recent income history whenever you are ready to apply for a home loan.
Be honest with lenders
It is important to have full disclosure with your lender. They are required to verify the information you give them and if you have not disclosed the full story it will not only slow down the process, but may affect your ability to borrow.
Improve your balance to limit ratios
Just like all borrowers, try to reduce personal credit cards and personal loans. Lenders take into consideration the limit as through it was fully drawn, so keep credit card limits to what you actually need. The less financial commitments you have, the better chance you will have at borrowing what you need.
Just like all borrowers, try to reduce personal credit cards and personal loans. Lenders take into consideration the limit as through it was fully drawn, so keep credit card limits to what you actually need. The less financial commitments you have, the better chance you will have at borrowing what you need.
Work with a lender who understands self-employed borrowers
If you are looking at getting a home loan, look around at lenders who have experience and knowledge working with self-employed borrowers. You can talk with them about your business income what income evidence you are going to be able to provide. They can also advise you on your options.
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