The Australian lending landscape is changing rapidly, with more and more opportunities for households to make the leap to home ownership. Where many individuals might have found it difficult to get the right finance to buy a home, the pool has widened and there are many more mortgage products on offer. If you’re one of the millions of self-employed in Australia, all that could be needed is a discussion with your lender about what options are available – you may be eligible for a self employed home loan.
So what are some questions you could come prepared with? Here are just two to get you started.
1. What paperwork will I need to provide?
The process of applying for a mortgage can be slightly different for a self employed person. For one, your pile of paperwork isn’t likely to be as high – whether you’re running your own small business or operating as a freelancer, you aren’t likely to have all the proof of income documents needed for a regular home loan, such as tax statements or payslips that reflect regular employment.
If you can’t find these documents, don’t despair: Your broker can recommend a low doc loan that could work for your scenario.
Low doc loans typically don’t mean that you need to provide any less evidence of your income – instead, you’ll need to show forms that more accurately reflect your financial position. Your broker can advise you on the exact lending criteria for a low doc home loan, but you might need:
• Business Activity Statements, showing expenses and profit – this may also need to be verified by the Australian Taxation Office (ATO)
• A registered Australian Business Number (ABN)
• A declaration of income, signed by your accountant
2. Should I check my credit report?
While you might have a strong source of income overall, being self employed can mean an irregular flow of money into your account. In many cases, it could be weeks or even months between pay cheques, meaning you may have fallen behind a utility payment at some point in the past. If this is the case, you may have record of the missed payment on your credit report.
This document can influence whether your application gets accepted, so it’s worth having a look over it before you apply for a low doc loan. While a missed bill is recorded, credit reporting agencies also update the entry as paid once the amount has been settled. Remember: You can get a free copy if you want to correct information included in your credit report, according to the Office of the Australian Information Commissioner, or else once a year.
However, if you spot an unpaid bill that you know you’ve cleared, get in touch with the company and credit reporting agency to amend the mistake. In any case, knowing the contents of your report can help you stay on top of your finances – and improve them if need be.