When applying for a low doc home loan, you’re required to bring along some documents to help prove the existence of your business. This is to provide lenders with evidence that you will be able to make repayments heading into the future. Proof of a steady income helps to alleviate their worries of credit defaulting.
One of the documents required by most lenders to satisfy their needs is a Business Activity Statement (BAS). The Australian Taxation Office created this document in order to report the tax responsibilities of businesses. These can provide invaluable information for lenders, allowing the financial health of a prospective borrower’s business to be reviewed and compared with the risk of lending a home loan.
What type of information is included on a BAS?
Summarising a wide variety of financial information, a BAS makes it easier for businesses to review their GST and make appropriate payments in a timely fashion. Some of the information included on the report includes GST, pay as you go (PAYG) income tax instalments, fringe benefits tax instalments, any expenses involved with your business and the tax required on them and many more figures.
All business owners who are registered for GST must file a BAS for each period – whether it be monthly, quarterly or annually. As this information is regularly updated, a BAS is one of the best pieces of proof for your business’s income. This is extremely important for self-employed individuals seeking low doc home loans for their property goals.
Is a BAS always necessary?
While these types of documents are one of the best pieces of business evidence, if they cannot be obtained for any reason there are other options. For example, some lenders accept bank statements or an accountant’s letter in lieu of a BAS in order to prove low risk as a mortgage recipient.
