Self-Employed and Seeking a Home Loan? We’ll Show You How!
Getting a home loan when you are self-employed can certainly be a little bit more complex than those on a steady salary. That’s not to say all self-employed borrowers will struggle getting finance, it just means you might need to work a little harder and pay close attention to the details.
A lender will want to know as much as they can about you as an applicant before they approve a loan for hundreds of thousands, if not millions of dollars. They will want exhaustive information regarding earnings, whether you’ve been steadily employed as well as whether or not you have a history of regular deposits into a savings account. This information helps a lender decide whether you’re going to be able to service the loan into the future. There may be a few hoops to jump through, but the expert team at Multi-Choice Home Loans are here to guide you through this entire process.
Know Your Numbers
It is best to make sure that you have all of your numbers in place to establish your borrowing power. You need to know in advance what taxable income level you’re obligated to pay in order to apply for credit and you will need to prove your income.
Get All Your Paperwork Done in Advance
The paperwork that lenders require can be significant, so it is important you give them not only the correct documentation, but also the full list they require. An incomplete application that goes back and forth stands the risk of being rejected altogether – be certain you have everything you need in advance.
As lenders looks for consistency of income, they’ll want to know how much you earn as well as how stable those earnings are.
Understand that lenders such as banks and mortgage brokers may use different methods of assessment for self-employed people. Lenders will most likely request the most recent two years’ worth of personal tax returns. If there is a large fluctuation between taxable incomes for those financial years, the lender will generally utilise the figures that relate to the lower of the two, even if that is the older statement.
By working closely with a trusted broker such as Multi-Choice Home Loans and your accountant, you can often unearth pertinent information about your business that can mitigate large deviations. It is important to inform your broker or lender about what has been going on within your business, as a solution may not be obvious to you, but will be to a trained eye. Lenders will want to see proof of your assets and liabilities, including savings, shareholdings and motor vehicles. It’s not just the dollar figure that lenders look at, but also whether you are capable of saving over the long term. A bank account statement showing regular deposits is one example of the documentation required.
Lenders will also look at copies of credit card and personal loan statements to see that you’ve been able to make any previous credit and bill payments on time. Keep in mind that it’s not just your credit card, home loan or personal loan repayments they’ll look at, but also any mobile phone and utility bills.
Remember – if you are self-employed, the best thing to do is to be prepared. With the right support and advice you can achieve your dream of becoming a home owner or property investor. Call our trusted team at Multi-Choice Home Loans for independent and quality advice before looking at property in Brisbane and around Queensland. They’ll help make your dreams come true.