Self-Employed Home Loans

Being self-employed has many benefits, but often comes with fluctuating income. Getting a home loan may be more complex. Fortunately, we can help you find the right home loan to suit you.

You can still get approved if you’re self-employed

Lenders want to see stable income from borrowers to ensure that you will have the money to make repayments. As a self-employed borrower your income is evidenced through BAS statements, tax returns and financial reports which are only lodged once every quarter or financial year. This means you must show a longer history of income compared to a salaried employee who may only need to show one or two payslips.

However, working with a broker can help you find a loan provider that will better understand your income as a self-employed person or business. Times are changing, and many lenders recognize that the self-employed often make for great borrowers since they have high salaries, are used to managing their money carefully, and many do earn a consistent income. You just need to find the right institution.

Two years tax returns are not required

Contrary to popular belief, lenders do not always require two financial years’ tax returns for a business in order to approve your home loan.

Alternative forms of evidence include:

One year’s tax returns and financials
Two quarters Business Activity Statements (BAS)
6 months business bank statements
Tax invoices over the most recent 3 months
The most recent 6 months’ payslips from your last salaried job and an accountant’s letter, if you’ve only just transitioned into being self-employed

The reality of self employed home loans

The general rule of thumb when pricing your home loan interest rate is that the longer the history you can provide to evidence stable income, the lower your interest rate and fees.

Unlike a salaried employee, businesses have cycles and fluctuating income. This means that the average income across a rolling 12 or 24 month period could result in lower acceptable income to calculate your borrowing capacity.

The advantage is that you can ask the lender to assess your income over a shorter period that is more reflective of your income to obtain the level of funding you need. Salaried employees cannot do this. They can only evidence what is in their payslips. However, this advantage does come at a higher total cost of finance.

We assist you in calculating and comparing different levels of funding so you can decide what cost of funding and repayment budget suits you to achieve your specific goals, whether it is to buy a home or a commercial property.

Working with Find Your Property Finance facilitates this process for you to help you make the right connections and plan ahead. We have specialist understanding of trust structures, company structures, consolidated financials and tax returns to be able to assess your situation and provide you with advice based on your unique situation — even if you’re newly self-employed or have changed your industry recently, it’s not a deal breaker.