Getting a loan while being self-employed should be simple.
Lenders can make mistakes when viewing self-employed income.
Often, it comes down to a lack of understanding from the bank regarding your self-employed income. A bank will rarely take the time to work with your accountant to understand your potentially complex structures thoroughly. This can result in the bank not maximising the income they consider when assessing your loan application. Inovayt’s combined 10 years+ of self-employed and business banking experience ensures that we don’t leave a single dollar unaccounted for, which can mean the difference between achieving your financial goals or falling slightly short.
Low Doc options
Low Doc loans allow you to apply for a loan without supplying recent tax returns or financial statements.
These loans require other forms of income verification such as accountant’s declaration, Business Activity Statements and Business Banking Statements, to name a few.
With reduced income verification by the lender, these products are considered a higher risk, which means they attract higher interest rates, a larger deposit and Lenders Mortgage Insurance (LMI).
How long do I need to have been self-employed?
Usually, lenders require you to be self-employed for a minimum of two years to demonstrate enough history to give the lender confidence in your income.
A handful of lenders with niche policies are happy to accept less than two years’ worth of self-employment history in as recent as six months. However, these lending options can attract higher interest rates and fees as they are a high risk to the lenders.
Frequently Asked Questions
The way self-employed income is assessed varies greatly from lender to lender and therefore the outcome of an application can be drastically different depending on which lender it is submitted to. For this reason, an experienced broker who knows different lender policies is crucial to the success of an application.
Lending criteria for self-employed borrowers will vary from lender to lender. Some of the main things lenders will be expecting to see are:
- Your lowest income figures for the past two years;
- Your most recent income as stated on your tax return; or
- An average of your income over the past two years.
If your business has suffered through the pandemic, there may be other documents to support your application. An experienced Inovayt professional can assist self-employed borrowers in getting their loan approved.
As soon as it becomes one of your financial goals, you should reach out to an Inovayt mortgage broker. We will put a plan in place to help you achieve your goal as a self-employed borrower.