There are many perks to working for yourself, but when it comes to applying for a home loan, it seems being your own boss sends up a red flag to banks and other lenders. Why? A salaried employee has a regular, steady income and is less likely to experience the cash flow volatility of a small business owner, contract, entrepreneur, trades person or freelancer.
Yet by being proactive and accessing specialist advice, self-employed applicants can also enjoy a successful and hassle-free road to securing a home loan. These are some essential steps.
SEEK EXPERT ADVICE
Trying to navigate the home loan landscape solo may not produce the outcome you desire. There are many experts who can help self-employed people access a home loan, and an independent broker is a good first port of call. At Venrock we are able to provide you with an up-to-date overview of which lenders on our panel are most comfortable lending to the self-employed, and also explain what sorts of loan products are available. We can also provide valuable advice around the sort of documentation you will need to have ready before we submit your application. Venrock will act for you and be on your side throughout this process.
GET YOUR AFFAIRS IN ORDER FOR A FULL DOC APPLICATION
Many lenders will lend to self-employed borrowers who provide their full business financials. This generally includes your personal and business tax returns for the past two years. If you have these documents on hand – and they reveal a fairly consistent income – applying for a loan should be relatively straightforward. However, the hectic schedule that comes with running your own business means many self-employed borrowers’ tax returns are not up to date. If you have time on your side, consider working with your tax advisor to lodge your outstanding returns. If you’re in a hurry, you may wish to explore the option of applying for a low doc loan.
CONSIDER A LOW DOC LOAN
Low doc loans are offered by a wide range of lenders and, as the name suggests, require 23 months of business activity statements instead of full financials, for example. A downside of some low doc loans is that they may only be available at a lower loan to property value ratio (LVR), which means you may need a larger deposit. Venrock can summarize your options quickly.
DO YOUR HOMEWORK
Checking your credit history is a good step for anyone applying for a home loan. If you’re self-employed, its definitely worth taking the time to make sure your credit history doesn’t include any defaults or errors – these can hold up your loan application if they are not rectified in advance. Taking the time to work out exactly how much you’d like to borrow is also a good idea. Venrock will show you how, without the inquiry showing on your file.
OUTSIDE THE SQUARE
It may be possible to apply for a home loan using a Certificate of Income Declaration – a document that verifies your income and is signed by your accountant. It’s wise to consult us before applying for a loan in this way, so we can advise which lenders will accept an income declaration. It should be noted, however, that applying for a loan using such a documents may mean that the required LVR (the portion of the property value you can borrow) may be lower, so you may need a larger deposit. While it’s a little more complicated for self employed borrowers, getting ah home loan can be easier than you’d imagine with Venrock Finance.
At Venrock Finance we understand that at times people may not be satisfied with the service they receive. In this circumstance we would like to hear from you so we can rectify this. This complaint will be investigates in a thorough and timely manner. Please put all complaints in writing to our Managing Director at PO Box 148 Rockingham WA 6168 or email to email@example.com. If, despite our best efforts, you believe your complaint has not been satisfactorily dealt with, you can lodge a complaint with the Australian Financial Complaints Authority, or AFCA. AFCA provides fair and independent financial services complaint resolution that is free to consumers.
Website: www.afca.org.au | Email: firstname.lastname@example.org | Telephone: 1800 931 678 (free call) | In writing to: Australian Financial Complaints Authority, GPO Box 3, Melbourne VIC 3001
Venrock Finance Australian Credit Licence No. 387134 Version 1 June 2013