{"id":8826,"date":"2020-02-26T13:25:09","date_gmt":"2020-02-26T13:25:09","guid":{"rendered":"https:\/\/www.onlinemoneyadvisor.com.au\/?page_id=8826"},"modified":"2020-10-15T18:13:17","modified_gmt":"2020-10-15T17:13:17","slug":"self-employed-mortgages","status":"publish","type":"page","link":"https:\/\/www.onlinemoneyadvisor.com.au\/self-employed-mortgages\/","title":{"rendered":"A Guide to Self-Employed Mortgages"},"content":{"rendered":"
How easy is it to get a mortgage when you\u2019re self-employed? Find everything you need to know in our self-employed mortgages guide<\/p>\n
Getting a mortgage when you\u2019re self-employed can sometimes prove more difficult than for people who are PAYG employees as some lenders can be wary of the fluctuating income self-employment might cause.<\/p>\n
This guide explains what you might expect if you\u2019re looking for a home loan when you\u2019re self-employed.<\/p>\n
Read from top to bottom for all the info, or click a link to jump ahead:<\/p>\n
If you\u2019ve been self-employed for two years or more, and have tax returns and financial accounts to prove your income, there\u2019s likely to be a choice of lenders you could apply to for a self-employed home loan.<\/p>\n
It may still be possible to get a home loan if you\u2019ve only been self-employed for a brief time. Some lenders might assess income from your last job and use that to verify your income. The idea behind this is that if your business closes you could return to work and earn a similar salary for another company.<\/p>\n
Depending on your other circumstances, borrowing with only a year of tax returns would usually require a deposit of between 10% and 20%.<\/p>\n
The key thing lenders will want to see if you apply for a home loan when you\u2019re self-employed is evidence of a stable income and employment continuity. The typical way lenders will want you to prove your income stream is through your tax returns and complete business financial accounts.<\/p>\n
If you have all your accounts in order and have been self-employed for more than two years, you may be able to find a mortgage lender willing to lend to you on similar terms they might offer home buyers who are employed and earning a regular salary.<\/p>\n
If you have been self-employed for fewer than two years, and don\u2019t have the paperwork to support your mortgage application, you may find it more challenging to secure lending at the level you desire. You\u2019ll also find you probably need a higher deposit and two or more years of self-employed accounts. On this basis, 80% of home loans would usually be the maximum lending you could secure.<\/p>\n
If you don\u2019t have the relevant up-to-date tax returns, another option you could consider is a low-documentation home loan, or low-doc loan. To get a home loan on this basis you\u2019ll need to be prepared to evidence your income through alternative documents and prove your income through bank statements, business activity statements (BAS) or a letter from your accountant.<\/p>\n
While all this sounds incredibly straightforward, the difficulty is that not all mortgage lenders offer low-doc loans and, those that do, tend to apply far higher interest rates than you would get if you applied for a regular loan.<\/p>\n
The mortgage brokers we work with have access to mortgage lenders across Australia and know the lenders who are most likely to approve your self-employed home loan application.<\/p>\n
Save yourself a heap of time and hassle and have a chat with a broker experienced in helping self-employed workers secure a mortgage. It\u2019s free and there\u2019s no obligation to follow through.<\/p>\n
If you’re self-employed and want to get a home loan, the rules tend to be as follows:<\/p>\n
If you’re self-employed, how much you can borrow when applying for a home loan will depend on how many years of tax returns you have. While most lenders will want to see at least two years’ tax returns and financial accounts, there are some lenders who may, in the right circumstances, be able to accept just one year’s tax return.<\/p>\n
As a general rule, a mortgage broker should be able to find a lender who may offer:<\/p>\n
If you’re self-employed and primarily work from home you may be able to claim mortgage interest payments, along with a range of additional tax deductions.<\/p>\n
Things you can deduct from your taxes include:<\/p>\n
If you have a dedicated office at your home, but don’t only work from home, you can still deduct some of these things mentioned above, but mortgage payments and home insurance will not be deductible.<\/p>\n
If you\u2019re a property investor and use a loan to purchase a rental property, you can claim the interest, or a portion of it, as a deduction. The property has to be rented, or available to rent, in the tax year for which you intend to claim a deduction. If you use the property privately, you can’t claim the interest<\/p>\n
If you’re self-employed, you will need the following to be able to meet most lenders basic lending rules:<\/p>\n
As well as the above you will need to comply with the rules for any home loan applicant, as follows:<\/p>\n
The best mortgage for you if you\u2019re self-employed will depend on your specific circumstances. To make sure you\u2019re getting the right home loan with the best interest rates and term, talk to an expert mortgage broker who can assess your situation and find the best mortgage for you, from all the different kinds of home loans and rates on offer.<\/p>\n
Make an enquiry for a free, no-obligation chat and we\u2019ll match you with one of the home loan experts we work with<\/p>\n
Six simple tips for getting a home loan when you\u2019re self-employed:<\/p>\n
Below we cover some of the frequently asked questions we haven\u2019t covered above\u2026<\/p>\n
If you\u2019re a first-time buyer and self-employed all the above rules will apply. You may find that you need a higher deposit, but there is no reason you shouldn\u2019t be able to find a lender willing to give you a home loan, so long as you can meet their affordability requirements and prove your income through your business records and tax returns.<\/p>\n
For a choice of lenders and to find the best home loan for your circumstances, get in touch and talk to one of the mortgage brokers we work with.<\/p>\n
If you have bad credit and are seeking a home loan when you are self-employed, you may face more challenges than borrowers without credit issues on their file, but this doesn\u2019t mean a mortgage is out of reach.<\/p>\n
Your best bet is to work with an expert mortgage broker experienced in helping borrowers with bad credit. The brokers we work with understand what lenders need to make them feel more comfortable lending to customers in these circumstances and can save you time, hassle and headaches by selecting those lenders most likely to agree your home loan.<\/p>\n
As far as lenders are concerned, the older you are the closer you are to retiring. Naturally this can cause lenders some concern over your long-term ability to repay the home loan.<\/p>\n
Therefore, if you’re applying for a home loan and you’re over 50, most lenders will ask to see more information about your current and future financial circumstances than they might need from a younger applicant.<\/p>\n
As well as the usual list of detailed financial information, to satisfy responsible lending obligations and minimise their risk, you will be asked to prove a viable exit strategy, which is how you plan to repay your loan when you retire.<\/p>\n
Selling the property isn’t regarded as an acceptable exit plan so you may have to be willing to use your superannuation payout or the sale of a different investment property to repay the outstanding debt.<\/p>\n
You may also find that some lenders will shorten the loan term they are willing to offer you to make sure the loan is repaid in full ahead of the standard retirement age of 65.<\/p>\n
A low-doc mortgage is when you apply for a home loan with alternative documentation to support your application. If you\u2019re self-employed you may struggle to be able to show adequate financial records to satisfy a mortgage lender. A low-doc loan is an ideal way to get around these issues.<\/p>\n
If you\u2019re interested in what loan you might be able to borrow on a low-doc basis and how much it could cost you, get in touch and speak to one of the home loan experts we work with.<\/p>\n
Although the Australian Prudential Regulation Authority (APRA) has lifted limits on interest-only lending, lenders are still cautious in their assessment of borrowers looking to secure an interest-only loan.<\/p>\n
As a self-employed borrower you may find lenders scrutinising your financial records with extra vigour, but there\u2019s no real reason why you wouldn\u2019t be able to qualify for an interest-only mortgage, provided you meet lender requirements.<\/p>\n
If you\u2019ve been self-employed for fewer than two years and don\u2019t have supporting documentation, it may be difficult to find a lender who will grant lending on this basis, but an independent broker may be able to help you find the right lender.<\/p>\n
The basic lending criteria for most investment loans include stable employment so if you have fewer than two years\u2019 financial records you might struggle to find a lender.<\/p>\n
Don\u2019t rule yourself out altogether though! The home loan experts we work with are expert mortgage brokers, if there\u2019s a lender out there who will lend an investment loan to you, they are best positioned to know who they are. Get in touch for a free, no-obligation chat and see what they can do for you.<\/p>\n
Lender criteria for owner builder construction loans can be tough to crack and many banks won\u2019t lend on construction of new homes unless the build is taken on by licensed builders. Added to the difficulty of proving stable employment when you\u2019re self-employed may cause difficulties when it comes to finding a bank willing to loan you the money.<\/p>\n
For your best chance of success you would need at least 40% deposit so you are borrowing less than 60% of the cost of the property and the construction, unless you are a licensed builder constructing the property.<\/p>\n
Get in touch for a free, no-obligation chat to get a clear idea of what this would mean for you.<\/p>\n
If your partner is self-employed and you\u2019re looking for a joint home loan, you should be able to use their financial records to help secure the lending you are seeking. The above criteria discussed in this guide will still apply, but you should be able to find a lender who can help in these circumstances<\/p>\n
The home loan experts we work with can help you find the right mortgage for the best available price, based on all your circumstances. As expert mortgage brokers they can use their knowledge and expertise to help you secure the lending you want at a price you like.<\/p>\n
Get in touch for a free, no-obligation chat and let them help save you a whole heap of time, hassle and, potentially, money.<\/p>\n","protected":false},"excerpt":{"rendered":"
A Guide to Self-Employed Mortgages How easy is it to get a mortgage when you\u2019re self-employed? Find everything you need to know in our self-employed mortgages guide […]<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"yst_prominent_words":[10357,10246,10090,10351,10339,10177,1366,1147,10052,10248,10358,10165,2618,1330,4215,10333,10332,10335,10334,10359],"_links":{"self":[{"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/pages\/8826"}],"collection":[{"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/comments?post=8826"}],"version-history":[{"count":0,"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/pages\/8826\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/media?parent=8826"}],"wp:term":[{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.onlinemoneyadvisor.com.au\/wp-json\/wp\/v2\/yst_prominent_words?post=8826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}