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Posted on 2017-12-08

Getting a Self-Employed Home Loan Is Simpler Than Ever

To get a home loan, or for any type of credit application, you need proof of income. Normally you would use pay slips. But if you’re self employed, it can often be a little harder to demonstrate that you have recurring income to give the lenders confidence that you can make the repayments.

Low Doc (low documentation) of self employed home loans exist to:
  • Make it easier for small business owners to own a home
  • Make borrowing fairer for the self-employed
  • Make the application process more effective for the self employed
How do low doc loans differ from traditional home loans?
  • Rates can be higher – this depends on the lender and accuracy of your information. For a competitive low doc home loan rate talk to a broker who can compare rates on your behalf
  • Ideally, you need a deposit of at least 20% – you will give yourself a better chance for approval if you can front 20% or more in the form of a deposit
  • To avoid LMI you may only be able to borrow up to 60% (80% for traditional loans) of the total value. LMI (lenders Mortgage Insurance) is required if a lender considers a borrower high-risk due to a poor credit rating or insufficient documentation
  • LMI does increase the loan value, however, it can often help borrowers get the funds for their property sooner
While required documentation may slightly vary between lenders, you’ll need to have the following ready:
  • Business name and ABN number
  • 12 month BAS statement (business activity statement)
  • Borrower’s Income Declaration – your accountant can help you with this
  • Have your tax returns ready in case you need them
The are various home loans from a wide range of lenders that have low doc options. Loan types include:
    Low Doc variable rate home loans
  • Low Doc fixed rate home loans
  • Low Doc line of credit loans
Before applying for a Low Doc Home Loan:
  • Speak to your accountant to ensure you have the required documentation ready
  • Ensure you have a lump sum deposit ready of at least 20%
  • Contact a broker to ensure you have the options available to you to select a competitive rate

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