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  • Writer's pictureReal Finance

How to get a mortgage when you're self-employed

Updated: May 19, 2022

Make sure to check out our informative tips for business owners who are looking to access a home loan when buying property.

If you’re applying for a mortgage as a business owner there are often a few extra hurdles to face. This is not to say that you cannot overcome them. In fact, with the assistance of a qualified REIF Finance Specialist, we can make the process of buying property easier.

To help you understand what you could be required to provide or deal with when applying for a home loan (if you’re self-employed), please keep reading this article to learn our biggest tips.

Reminder – it’s important to note that different lenders have varying loan requirements. We’ll be providing general information on what most lenders require. Though, it’s best to consult one of our Finance Specialist’s who’ll be able to assess your situation and help you understand which bank can meet your lending needs.

Prove your ability to save

When you’re in the market to buy real estate, banks want to feel confident in your ability to save. You need to be able to prove to them that you can save and build a solid deposit.

As a business owner looking to buy real estate, most lenders will look favourably upon you if you can save a 20% deposit. The lower your ratio is, puts you in a better position to acquire their lending.

For most business owners, consistent cash flow can often present as challenging. Therefore, it’s important that you can show to lenders you’re still able to make regular saving contributions, even during quieter times. This will show that even during these times, you’re still capable of being able to pay back the loan and in a timely manner.

Keep a paper trail (i.e., tax and profits, etc.)

As a self-employed borrower, your ability to keep a paper trail will be beneficial in applying for a mortgage. Keeping a tidy paper trail will assist your lender. Your desired lender will need to evaluate the following information.

  • Tax returns (at least 12 months as a rule of thumb)

  • Profit and loss statements

  • Balance sheets for the business

  • Your personal tax returns (at least 12 months)

  • That your ABN has been registered for at least two years (some lenders can accept a shorter time frame)

  • Depending on the lender, you may be required to provide additional documentation. This’ll just help them to better understand your circumstances and if you’re capable of repaying your loans.

It's important to keep a paper trail when accessing lending if you're self employed
It's important to keep a paper trail when accessing lending if you're self employed

Other considerations for accessing a home loan if you’re self-employed

Here are some other factors for you to consider for improving your chances of being approved for a mortgage if you’re self-employed.

Not only will it save their time, but it will save yours.

Being debt free will improve your chances of being accepted by many banks as it increases your borrowing capacity.

Have a war chest

Also known as an emergency fund, a war chest is something that most self-employed people should have.

This can help safeguard you in times of financial distress and is something that lenders will look favourably upon. To learn more about war chests, click here to read an earlier article.

Review your credit score

Being on top of your credit score is imperative for your financial health. You should regularly review your score to identify ways of ensuring your credit score is at its best possible health. For information on how to improve your credit score, click here to learn more.

More information

As mentioned, it’s a great idea to consult a Finance Specialist/ Mortgage Broker when applying for a home loan. When buying property, they can assess your entire financial situation and source a suitable lender and loan product that can work with your circumstances.

REIF are helping business owners looking to buy real estate, daily. If you’re in a similar position and wish to explore your options, please feel free to contact us on 1300 130 932.

Alternatively, click the button below to book an initial consultation. Always happy to help!

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