Are you one of the 2.2 million Australians who is now self employed?
Being self employed can be an incredibly rewarding experience. You get to be your own boss, set your own hours and pursue the career goals you’ve always dreamed of. But as a self employed professional, it could also be challenging to obtain a mortgage.
Fortunately, Sunshine Coast Financial Solutions can help. We are experts in self employed home loans and can work with you to find the best mortgage solution for your needs.
What does it mean to be self employed in Australia? And how will understanding the definition of self employment help you with your application for a self employed home loan?
In Australia, a self employed person can be an independent contractor, a business owner, a sole trader, a PAYG (Pay As You Go) professional or a partner in a partnership.
Being self employed means that you work for yourself rather than being an employee of a company. As a self employed individual, you are responsible for managing your own business. You’re the one bringing in customers, providing goods or services, handling the finances, paying taxes and complying with any relevant industry or government regulations.
Being self employed in Australia used to mean running a small business in your local town. But these days, self employment can take various forms. It could mean being a freelancer, acting as a consultant or operating as a sole trader (a common business model for tradespeople).
According to the most recent data, Australia now has around 2.2 million self employed individuals, representing almost 16% of working Australians.
Understanding whether or not your working situation classifies you as “self employed” will help you to maximise the benefits that come with this type of employment.
For example, you may:
Perhaps more importantly, you will be able to apply for home loans for self employed individuals. These specialised mortgage products are specifically designed to help self employed people get a foothold on the property ladder.
For example, some lenders will allow self employed individuals to borrow up to 95% of the property value if they can provide sufficient documentation.
If you are shopping for self employed home loans right now, you might be wondering if you would be better off finding a mortgage broker or going directly to a bank.
What are the differences between a bank and a mortgage broker? And which option is better when it comes to obtaining a self employed home loan?
A bank is a financial institution that operates as a direct lender. This means that they originate, process and fund home loans themselves. A bank is not obliged to let you know if a competitor has a more suitable product, and they are not required to act in your best interests.
A mortgage broker is an accredited professional that works for the customer (that’s you!). The goal of a broker is to find each customer the best deal to suit their individual needs. They are legally obligated to always work in the best interests of the customer.
A mortgage broker will source the best loan for you from a bank or other financial institution (such as a non-bank lender). They generally do not charge their customers a fee for their services – instead, they will receive a standard commission from the lender once the loan is finalised.
The only way to secure a competitive home loan is to compare loan products from a variety of lenders.
The downside to going straight to your bank for your mortgage is that they will not tell you what loans are available from other lenders. They may not even tell you if they have another loan product that would be more suitable! You’ll have to make sure you ask all the right questions to find out whether the loan they’re offering is really the best fit for your needs.
To compare your bank’s mortgage offerings with other home loan products, you will need to thoroughly research the market and then approach other lenders directly to enquire about their products and best available offers. This requires a lot of time and effort and still may not yield the best results. You might identify an excellent loan product, but if the lender is unfavourable towards self employed applicants, you could just end up having your application rejected.
However, when you go to a mortgage broker, you instantly gain access to an extensive panel of lenders. Your broker will be able to quickly and accurately compare the various loan products available and then identify which ones represent the best value for you.
A broker will also be able to tell you which lenders are favourable towards self employed applicants and may even have access to special deals tailored for self employed borrowers.
Mortgage brokers work with a variety of lenders and have many customers with a range of financial situations. This means they have access to a lot of information, including the most up-to-date products and rates available on the market.
Brokers have a wealth of experience in helping clients to secure the most suitable loan product for their needs. They also have established professional relationships with a range of lenders, enabling them to negotiate successfully on behalf of their customers.
With an experienced mortgage broker, you’ll have access to unbiased expert advice. They can help you to understand and accurately compare interest rates, fees and loan features. They’ll also answer all your questions, handle the paperwork and follow up with the lender.
In other words, a good mortgage broker will help you find the best home loan for your situation and financial goals. And they’ll do it quickly, accurately and entirely for free!
If you’re self-employed, finding the right mortgage can be tough. However, while lenders used to view all self employed borrowers as high-risk applicants, a growing number are now much more understanding. These lenders will assess each application on a case-by-case basis and appreciate that self employed borrowers can still be counted on to reliably service their home loans.
At Sunshine Coast Financial Solutions, we’re familiar with the unique challenges associated with self employed home loans…and we’re here to help! We have a wide range of mortgage solutions to choose from and our brokers will work tirelessly to find you the best deal possible.
You deserve to have a home that you can be proud of, and we’ll do everything in our power to make that happen for you. We understand the importance of securing a mortgage, so let us take the stress out of the process for you.
Our mortgage brokers receive a commission from the lender you choose to go with, only after your home loan is approved and processed. This means using a broker won’t cost you any extra money.
Because mortgage brokers have access to many different lenders and a wide variety of home loans, we can determine which loan product is the most cost-effective for you, potentially saving you thousands.
Our mortgage brokers are legally bound to always work in your best interest. We aren’t aligned with one specific lender, so we don’t have ulterior motives. Our goal is to secure the best loan to suit your needs.
Our experienced mortgage brokers will oversee your paperwork, double-checking all of the documents before submitting them. Not only will this streamline the process, but it could potentially save you time and stress.
A pre-approval can help give you confidence when shopping for your dream home. Our broker will work out how much you can realistically borrow and secure pre-approval for a speedier process, once you’re ready.
Our mortgage brokers have extensive knowledge about a wide range of mortgage products and the industry as a whole. They will help you understand what’s on offer and can even match deals.
Our lending panel includes loan products specifically designed for self employed borrowers. This may give you access to improved loan features, interest rates or borrowing capacity.
At SCF Solutions, we specialise in helping self employed borrowers find the best loan product to suit their needs. This industry expertise gives us unique insights into self employed home loans.
Our team of mortgage brokers is experienced and reliable, and we will work with you every step of the way to make sure the process is as easy as possible. We want to help you achieve your dreams, and that starts with finding the right self employed home loans for you.
Apply now on our website or give us a call to speak with one of our experts!
If you’re thinking about applying for a home loan for self employed borrowers, there are some simple steps you can take to strengthen your application. Here are our top broker tips for self employed applicants:
Without a regular payslip, lenders will look to your business tax returns for proof that your business is successfully turning a profit. This means you need to have up-to-date tax returns on file.
Addbacks such as car allowances, depreciations, interest expenses and excess superannuation contributions will help increase the income a bank will use to determine if you can afford a loan.
A positive credit rating will go a long way towards convincing a lender that you’re a lower risk borrower. Reduce existing credit limits (but keep these accounts open) and avoid applying for new credit.
Make sure you pay all your bills on time! While a day late may not seem like a big deal, any late or missed debt facility payments will stay on your credit file for up to 2 years and can cause a lot of issues.
Lenders prefer to see stable income, so try to maintain steady profits over time by securing long-term contracts. Alternatively, try implementing strategies to offset seasonal fluctuations in business income.
Aim to reduce your overall debt burden by paying down existing debts or consolidating high-interest loans. A lower debt-to-income ratio indicates a lower-risk to lenders and improves your application.
Ultimately, one of the most important steps you can take when considering a home loan for self employed borrowers is to talk with a mortgage broker. A broker who specialises in self employed home loans will be able to answer all your questions, do an assessment of your current borrowing capacity and provide expert advice on how you can improve your application before you start applying.
Of course! Being self employed certainly doesn’t mean you can’t qualify for a home loan. However, it does mean you might not have all of the standard documentation required for a traditional mortgage or the ability to accurately demonstrate your real cash flow. At SCF Solutions, we have professional finance brokers specialising in home loans for self employed borrowers. They understand the unique documentation requirements of self employed applicants and can assist in finding the right home loan for your needs.
While you can go straight to a bank or non-bank lender, we recommend speaking with a home loan broker who specialises in mortgages for the self employed. This will ensure a more streamlined application process that is tailored towards your needs. When you’re ready to purchase your next property, contact us for a personalised appraisal to see if you qualify for a home loan for self employed borrowers.
If you’ve been self-employed for less than two years it may become a little tricky to apply for a home loan. However, this doesn’t mean it is impossible. Some lenders will look at your past income and take that as proof you can afford the loan, so long as it is backed up with similar figures over the trading life of your current business. Certain lenders are also willing to approve these kinds of loans for self employed applicants who can produce a larger deposit.
To find out more, contact a broker for some tailored advice.
More often than not, a poor credit history is going to negatively impact your application. However, some lending institutions offer a range of home loans specifically designed for people with a less-than-stellar credit history, and a good mortgage broker may be able to help liaise with them for you.
Alternatively, if you’re not in a huge rush to buy, it may be worth taking steps to improve your credit rating before you apply for a home loan.
When applying for a self employed home loan you’ll typically need to supply the following documentation:
Note: All mortgage applications are subject to a thorough credit assessment and loan suitability criteria. For personalised lending advice, contact a mortgage broker today.
