Blog: Finding the right loan when you’re self-employed
Obtaining a mortgage as a first home buyer can feel overwhelming, especially if you're self-employed.
Lenders look for certain qualities when analysing potential borrowers, and the inherent risks that come with being self-employed can make you appear less than ideal.
With that said, there are still plenty of options for self-employed home buyers seeking finance.
Low documentation loans
A popular option for self-employed buyers is opting for a low documentation loan, also known as a low doc loan.
These mortgages are tailored for self-employed individuals, as they require less paperwork than traditional home loans.
When applying for a mortgage, self-employed borrowers may not be able to produce the necessary documents, such as certain financial statements and tax return information.
That said, providing some documentation is still necessary. You must typically declare how much income you have and back it up with an accountant's letter and bank statements.
Additionally, you will need an active Australian Business Number. Self-employed borrowers are also often required to put down at least a 20 per cent deposit.
Enhancing your chances
It's also wise to get your financial affairs in order to make yourself a more attractive mortgage candidate.
Strategies include improving your credit score, paying off existing debt, offering a larger down payment and showing proof of savings.
When dealing with specialised loans such as these, it's also a good idea to work with an experienced mortgage professional.
Mortgage brokers and home loan specialists can assist you in identifying your options and determining which mortgage best suits your needs.