Why you’ll often run into trouble if you’re self-employed
Lenders want to know how likely it is that a borrower can repay a loan before they’ll approve the application. To help them decide this, they’ll want to verify your income. While this is an easy task when you’ve got payslips handy, it can pose difficulties when you’re self-employed.
To qualify for a standard home loan, you’ll have to provide business financial documentation such as:
- Your last two years’ individual and business tax returns
- An Australian Business Number (ABN) registered for 24 months
- Business activity statements (BAS) for 12 months showing a steady and consistent cashflow
- Business bank statements
- Interim financial statements
This might not be paperwork you’ve got easily on hand, or what you do have might not conform with the lender’s guidelines.
That said, many lenders are willing to give mortgages to self-employed borrowers who don’t have the required documents for a standard home loan. They’ll offer something known as ‘alt-doc’ loans which allow you to verify your income through alternative methods.