Self Employed, Business Owners, Low-doc Mortgage broker-bris

Looking for a home loan? Bank say no? Broker say no? 

Talk to the Specialty Home Loans team - Brisbane Mortgage Broker helping self-employed clients.

As experienced business owners ourselves, we are familiar with different business structures and reading financials. Since business structures and income can be complex, you often need a different perspective to find a solution. 

We can help a whole range of business owners (sole traders, partnerships, trusts and companies) with their residential and commercial lending needs. 

How does a bank calculate income for business owners/self employed? 

Unlike PAYG employees, business owners often don't have payslips to represent their income.
In most cases, banks rely on financials and tax returns, usually over two years, to calculate a business owner's income. 

Each bank has their own rule therefore a broker needs a strong grasp of lender credit policy to choose a suitable lender for their client's scenario. Some rules used by banks include:
Average profit across two years or Latest year's profit,. In cases where there is significant growth, some lenders may cap profit to the previous year plus 20% In cases where there is a decline in profit in the latest year, some lenders may use the previous year's profit (lower year).  

If your company pays yourself a regular and consistent director salary for at least 6 months, this may be used in your servicing of a loan.

Lender rules can significantly impact your borrowing capacity therefore lender selection is an important consideration. Mortgage Brokers Brisbane will do the leg work for you and find lenders to suit your situation.  

Why should your mortgage broker do an in-depth assessment of your financials and tax returns? 

A broker specialising in self-employed should understand the flow of money in a business structure so they can best present your income and scenario to the bank. 

There also needs to be a thorough analysis of business deductions. Some lenders allow certain deductions to be added back to the net profit figure to boost your borrowing capacity. These add-backs can include depreciation, interest, director superannuation (above the guarantee rate) and one-off, non-recurring expenses.   
 

Do business owners pay a higher interest rate for home loans than PAYG employees? 

Generally, business owners pay the same interest rate as PAYG employees if their ABN is active for the minimum period stipulated by the lender and they have full documentation. 

Does my business need to be running for two years before I can apply for a home loan? 

Not necessarily, there are some banks who will accept businesses with an ABN registered for 12-18 months.   

There are non-bank alternative lenders who will look at businesses with just 6 months ABN registration, however the interest rates will be higher. 

Can I get a home loan with just one year tax returns and financials?

There are lenders who will assess an application with just one year tax returns and financials.

I am self-employed but don't have a tax return. Can I get a home loan? 

There are non-bank lenders who will use alternative sources of documentation to substantiate business income. These specialty products are known as alt-doc or low-doc loans and usually attract higher interest rates and fees. 

Evidence that may be considered for alt-doc loans include: BAS statements or Business bank statements or Accountant declaration supporting your income declaration  
 
If you want lending solutions for business owners by business owners, please get in touch with the team at Specialty Home Loans - Brisbane Mortgage Brokers for business owners.