How to get a mortgage when you’re self-employed
In today’s changing employment landscape more and more people are deciding to start their own business or working from a variety of freelance jobs as they ditch the 9-to-5 grind.
In fact there are more than 2.3M businesses registered in Australia alone.
But there’s a common misconception when it comes to buying a home as a self-employed person. It’s assumed you’re automatically out of the running for a mortgage.
While there may be a few more challenges, or “hoops” to jump through, there are definitely avenues we can explore to secure your home loan for you.
How long do I need to be self-employed for?
There’s no hard and fast rule, but the majority of lenders will want to see at least one business tax return, but two to three years is even better.
If you’ve been self-employed for under one year it may become a little tricky, however some lenders will look at your past income and take that as proof you can afford the loan if it’s backed up with similar figures in your business over its trading life.
What about Alt doc loans?
This could be an option, but it comes down to the lender and if they will allow you to submit an income declaration instead of your tax return.
Sometimes with low doc loans you’ll be charged Lenders Mortgage Insurance or Risk Fees as well.
Has COVID-19 made it harder for self-employed?
This depends on the lender and the industry you operate in, however some are only allowing a borrowing capacity of 80 per cent due to COVID-19 impacts.
However, most self-employed loans are assessed on a case by case basis but lenders are definitely seeking more evidence of income than ever before..
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