Home Loans for Self-Employed

Getting a home loan can be a tedious process, with forms to fill out and documents to submit. But if you’re self-employed or your primary income comes from commission or freelance work, you may face more challenges.

One of the first steps in applying for a home loan is the submission of documentary requirements, which the lender can use to verify your income. This is an easy requirement for those who are regularly employed as they just need to provide copies of their pay slips. Some lenders can even confirm sources online, which further hastens the process.

Documentary Requirements for Self-Employed Loans

If you are not on an employer’s payroll, other documents will be needed to prove your income. The specific documentation needed vary from one lender to another, but it may involve bank statements, profit and loss statements, and tax returns. There are also lenders who can accept BAS statements and cash flow projections.

Being self-employed doesn’t mean you have a lower chance of getting approved for a home loan, but it might mean you just need to work a bit harder to make the numbers work.

A mortgage broker can help determine how much you can borrow with your current taxable income level, and whether your accountant may need to re-structure entities or tax affairs to qualify for credit in future. An experienced mortgage broker is best placed to model different scenarios and loan structures that identify the best strategies for financing. Otherwise you might waste a lot of time and effort in applying for a home loan yourself, only to be disappointed with the result.

In evaluating applications from self-employed individuals, lenders are looking for consistency of income. They like to see that if you have a business, it is already established and providing you enough cash flow to meet their minimum servicing requirements.