Self employed lending can be complex due to the differing lending requirements. But it is possible to find a competitive self employed home loan.
The loan and interest rate offered will depend on a number of things:
How long you have been self employed
What documents you are able to provide
Applications from self employed borrowers are scrutinised more heavily by lenders to ensure that the income is stable and consistent. The document requirements can be quite onerous, particularly compared to a PAYG borrower who only have to provide a few payslips.
What is a low doc home loan?
A low doc home loan sometimes called an alternative documentation loan, is the type of loan that can be approved without the normal income paperwork required for a standard home loan, such as tax returns and financial statements. The proof of income is done via different means. This enables self employed borrowers who qualify to be able to get a home loan.
Generally you will estimate your income and then provide other documents to prove that this is reality.
BAS statements: They need to be lodged regularly and show sales for a quarter. Lenders can verify income using 2 to 4 BAS statements which should reflect your current trading situation.
Business bank statements: These will also show regular income flowing into your account which can be used to verify income.
Accountant's verification: Self employed borrowers often work closely with their accountant, so they may also be able to verify that the income declared is correct.
Ideally the lender will have specialist options for self employed as well as competitive non self employed home loans. This way they will be able to ask the right questions to determine if you qualify for a standard loan with a really competitive rate. If not they should be able to take you through the steps to determine the loan product that would suit you and enable you to do what you want to do.