Self-employment doesn’t prevent you from obtaining a home loan. But, since there is no paycheck stub to provide as proof of income, lenders will require more documentation than if you were employed by someone else. To help make the application process easier for yourself, prepare your tax returns, bank statements, etc., prior to speaking with a mortgage professional so you can gain a better understanding of what type of loan you are eligible for.

Know What Lenders Want to See

In addition to assessing the reliability of your income, most lenders will determine if you are able to repay loans. Lenders typically review both a borrower’s business and personal financial situation for self-employed individuals (i.e., sole proprietors) as well as some other types of self-employed borrowers.

Before your meeting, gather:

  • Your latest two years of tax returns and ATO notices of assessment
  • Recent business and personal bank statements
  • Profit and loss statements
  • Details of current debts and credit limits
  • Evidence of your deposit and savings history

Some lenders may consider alternative documentation, but there are no universal standards. Home loan brokers in Adelaide can help you find out which lenders will work with your unique income situation and what type of proof they will need.

Explain Your Business Income Clearly

The amount of money your company makes does not necessarily represent what a lender will consider when determining how much to lend you. A lender will likely review net profits, any additional money that was added back into the company during the year, and whether there have been significant fluctuations in earnings over time. Therefore, if your income has increased or decreased significantly, provide a detailed description of why this occurred along with supporting documentation.

Your regular business costs and personal expenses should be listed. Listing these items will give your broker a better understanding of how much money you spend each month. Your regular business costs and personal expenses can also help establish a reasonable amount of money you may be able to borrow.

In the case of seasonal business income, provide a short overview of how this occurs. If applicable, also provide details on any large contracts, ongoing relationships with clients, or future business opportunities. This information will assist your broker in presenting your earnings trends to potential lenders and in finding funding options that match your company’s cash flow.

Make the Most of Your Consultation

A mortgage interview with a mortgage consultant in Adelaide is an opportunity to talk about what you want from your home purchase and have some of your questions answered prior to submitting an application. Be prepared to explain:

  • The type of property you want to buy
  • Your preferred price range and deposit
  • Whether you have existing loans or business liabilities
  • Any plans that may affect your income, such as expanding your business

Openly share any concerns with respect to your past financial history. Your broker cannot accurately evaluate your options without being aware of the complete picture.

Take the Next Step With Confidence

The process of preparation allows individuals to prevent delays and select the best option. Prior to beginning a task, individuals should organize their files, update their financial data, and request further information regarding any issues that they do not comprehend.

The best way to obtain a proper home loan for your situation is to work with home loan brokers in Adelaide. They will help you understand the home loan application process. Also, having a good mortgage consultation in Adelaide can help you see where improvements are needed before you actually apply for a home loan.

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