Looking for some self-employed home loan tips that would lessen the challenges and fees for you to get approved for your property loan?
Yes to that?
If you own your own business, earning sufficient money, you’ll know all about the challenges of admin.
Keeping your accounts, finances, and income flow all on track as a self employed is not easy. The last thing you need is a ‘no’ on your home loan application because of the paperwork.
But here’s some good news for you to say YES to your dream home property today!
There are alternatives when it comes to applying for a home loan as a self employed.
However, keep in mind that the applicable standard fees, LMI, principal home loans, and monthly interest still depends on the lending company.
Self Employed Home Loan Made Possible in 4 Steps
1. Sort out the loans paperwork you do have.
When mortgage lenders are looking at a home loan application from self-employed, they are usually looking for a regular level of income in your business. Usually fees are dependent on this.
That shows and says to them that you’re able to make the proposed monthly repayments for your property purchase.
Start by showing paperwork that tells them you’ve been self-employed for an ongoing amount of time. Show that you do earn a regular amount each month.
Being able to demonstrate these things to them will help build your case when applying and to qualify for repayment.
Given that it is sometimes a bit of a challenge to provide all the paperwork you need to document your income, some lenders have worked out a different process for it – it’s called alternative documentation (Alt Doc for short).
It is specially designed to meet the needs of self-employed or small business owners who can’t provide the income documentation required by traditional lenders and mortgage insurers but can still provide valid information, just with different types of paperwork.
The major non-bank lender who pioneered this type of loan is Pepper Money. When Pepper consider an Alt Doc application, some of the things they look for are:
- Has your business been ABN registered for at least 6 months?
- Has your business been GST registered for at least 6 months?
- Business Activity Statements (BAS), and/or
- Business Bank Account Statements, and/or
- An Accountants Letter.
2. Be smart with your cash flow as this will affect your home loans:
Keep things on track and Use a home loan calculator as Needed
Using a financial plan to manage cash flow says to be a proven strategy that can be really good for people who are self-employed. However, this requires commitment.
Paying off any outstanding debts such as credit cards or personal loans will positively impact your cash flow.
This will potentially impact also your your standard credit score, which may also mean you’ll qualify for a higher loan amount with some lenders and home loans company.
This will also help you have a good foundation when planning to refinancing home loan in the future.
On the other hand, you may also consult a home loan specialist ahead of time to give you advice on this including any fees to be prepared and be included to your monthly budget.
As long as you have a standard on how to manage your cash flow, it will be a good foundation.
3. Be up front with your lenders: Trust their experience when it comes to loans and mortgage.
From the get-go, it’s really important to be upfront about what’s been going on in your business or company as a self-employed. This will add integrity to the lending process.
A home loan specialist always suggest that this is particularly important if there are any large variations up or down in the taxable income shown on your annual financial statements.
Usually from one year to the next. Alternative lenders like Pepper have experience with a range of borrowers who are self-employed and are familiar with evaluating the particular cash flows of small businesses. You might want to check their company.
Take note also that these transparency could somehow impact to the LMI rate or any interest to be included to your home loan to cover insurance. If you want to know more about LMI, you can check it here.
4. Tackle the taxable-income dilemma: Get good help for your loans as a self-employed
One of the biggest challenges self-employed people and small business owners face is their taxable income. This involves fees to be considered. You need help with this.
The thing to think about when you address this question for your business is how your financial statements today will impact your borrowing options in the future.
Talking to a financial adviser, tax professional, and a home loan specialist about your goals (like buying a house) when you work out your taxable income is an important step.
These are some ideas to help your loan application planning and prepare beforehand for the fees. There are many options for self-employed people who are looking to get a home loan but haven’t been successful with the banks.
Self Employed Home Loan Support by Us – Key Choice Group – Your Home Loan Expert
If you’d like more information and help, talk to us today. We will help you about how we may be able to put you in touch with a lender that can help if the major banks have said ‘no’ to your loan application.
Ready to get your free assessment from a home loan specialist and mortgage broker? Contact Key Choice Group Today and receive help today.
Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser.
The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 1300 722 494.