Home Loans for Self-Employed Individuals

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Posted date: November 4, 2010 | Tags: , , , | No comment

Getting home loans when you’re self employed can be more challenging than getting approved or a mortgage when you are more traditionally employed.  Many banks and home loan lenders in Australia will deny mortgages to self employed people because you fit outside their narrowly defined criteria for home loan approval.  There are a number of lenders who do provide home loans to the self employed, although you may need to do some research and home loan comparison among various lenders to find one which will approve you and give you good rates.

Common problems self-employed people have getting home loans

There are a number of reasons self employed individuals find it difficult to get home loans Australia, from not having up to date financial records to prove your income, to being self employed for less than two years.   There are situations where your paperwork doesn’t accurately reflect your level of consistent income, which can make it impossible to get a home loan in Australia. Home loan lenders consider self employment income to be less reliable and stable than employment from a job you’ve held for several years, and hesitate to lend.

Best home loan solutions for self-employed people

Just because you are self employed and have been denied a home loan from a bank or mortgage lender doesn’t mean you have to give up your quest to become a home owner.  The best home loan solutions for individuals who are self employed are sometimes called “low doc loans”, and they require slightly less documentation for approval than a standard home loan.  With some home loan comparison, you’ll find that you can get self employed home loans as low as 6.59%, and up to 80% loan to value ratio (LVR).

Many traditional home loan lenders that do actually provide home loans for the self employed will offer at most up to 60% loan to value ratio to individuals who are lacking supporting financial statements  – which means you have to have the rest of the money available as a down payment.   If you have not been able to save up that amount of money toward the cost of your home, you’ll need to compare options of lenders providing at least 80% loan to value ratio, and perhaps combine it with a First Home Owner Grant, if eligible, to further reduce your cost of home ownership.  In fact, the cheapest home loans are available to people who compare their lender options thoroughly before selecting a lender; and who look to combine various home owner grants and stamp duty concessions with their loans.

Low doc loans

There are a variety of low doc loan products available to Australians, such as those for self employed people, people without tax returns, individuals who have previously been rejected by previous lenders, and ABN under 2 years old.  Low doc loans can also assist individuals who want to live in remote locations that other lenders do not provide home loans for, and no BAS required.