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Home Loans For Self-Employed Borrowers 2022

Break Free Home Loans are a leading Melbourne mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.

Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.

Are you self-employed and looking for a home loan in Melbourne? It can be tricky to find a loan that suits your needs, but don’t worry – we’re here to help. Our brokers work with a wide range of lenders who offer some of the best home loans for self employed borrowers. If you’re looking for a home loan for self employed individuals finance option, we can help you find the right loan product to suit your needs. Our brokers can help you go through self employed home loans requirements, check your eligibility and submit a loan application on your behalf. Contact us today.

What Are Self Employed Home Loans?

Self employed home loans are designed for people who are self-employed and looking to purchase a property. While getting a home loan for self employed individuals can be more difficult due to lenders viewing your self employment as higher risk, it’s possible to do so to your advantage. You simply need to prove you have the cash flow to repay your loan. You’ll have to provide extensive financial documentation to show your income, and go the extra mile to support your application. For example, you can offer a higher deposit or prove you have an excellent credit score to back you up despite not being traditionally employed.
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How Much Can You Borrow?

The amount you can borrow with a self employed home loan will depend on your individual circumstances, including your income and debts. However, low doc home loans for self employed borrowers may have restrictions on borrowing limits.

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When Can I Qualify For A Loan

In order to be eligible for a self employed home loan, you will need to have been self-employed for at least 2 years. You will also need to provide tax returns and financial statements to show that you are able to afford the loan repayments.

Self Employed Home Loans Requirements in Melbourne

The eligibility criteria for self employed home loans can vary from lender to lender, but generally you will need to have a minimum income of $50,000 per year and be able to provide tax returns or financial statements for the last two years.

Two Years Tax Returns

Two years of tax returns are generally required to qualify for a self employed home loan. However, some lenders may require additional documentation such as business activity statements (BAS) or profit and loss statements.

Balance Sheet

To qualify for a self employed home loan, you need to provide a balance sheet to show your assets and liabilities.

External Liabilities

You should pay off all outstanding loans and debts. External liabilities will create a negative assessment of you for lenders and restrict your loan terms. You need to have low liability, or better yet, no liability to be seen as a credible borrower.

Assets

You should also provide details of your assets and other investments that can be written off. This can be done by providing proof of ownership of property or investments.

Credit History

You need to show a good credit history to be eligible for a self employed home loan. You can complete this requirement by providing a credit report from a credit bureau.

Savings

You will need to provide evidence of your savings history. This can include bank statements, term deposit statements or shares.

Other

In addition to meeting the eligibility criteria, you will also need to provide documentation such as tax returns or financial statements for the last two years. You may also be required to have a deposit of at least 20% of the purchase price.

How To Apply For A Home Loan For Self-Employed Borrowers

If you are self-employed and looking to apply for a home loan, there are a few things you need to know beforehand. Home loans for self-employed borrowers have different eligibility criteria and requirements than regular home loans, so it pays off to apply with a qualified broker. These are some steps you can follow on your loan application:

  • Compare your options: Home loan products come in all shapes and sizes, so it pays to compare your options before you apply. Calculate your budget and consider your current lifestyle and expenses. Make sure you only apply for a loan you can afford.
  • Get your paperwork in order: Home loan applications will require supporting documentation, so make sure you have everything you need beforehand. This includes tax returns, financial statements, and asset information.
  • Work with a broker: A qualified mortgage broker can help you navigate the home loan process and find the best loan for your unique situation. They can help you compare rates and check the fees, features, and other benefits of different home loans.
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How Do Lenders Calculate Your Income?

Home loan self-employed finance lenders typically assess your income on a case by case basis. When you are self-employed, there is no regular paycheck to rely on, so lenders have to get a little creative. The first step is to look at your tax returns for the last 2 years. They will use your business’ net profit (or loss) as a starting point.

From there, they will make some adjustments. For instance, they may add back in any depreciation expenses that you claimed on your taxes. They may also make an allowance for any one-time expenses, such as the purchase of new equipment. The final step is to calculate an average income for the last 2 years. This will be used as your qualifying income for the loan.

It’s important to remember that each lender has their own guidelines for self-employed borrowers. So, it’s a good idea to shop around and compare offers before you decide on a loan.

What Is “Add Back”?

Add back is an accounting method used to calculate your taxable income. It allows you to include certain expenses that are not deductible for tax purposes, but which may be relevant when assessing your ability to repay a loan.

As a self employed individual, an add back is relevant because your taxable income may not necessarily reflect your actual income. Furthermore, if you’re newly self employed, there may be some expenses in your first year or two that won’t be ongoing.

The most common expenses that can be added back are:

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  • Home office expenses
  • Travel expenses
  • Depreciation and amortisation
  • Additional payments into your super
  • One-off expenses like set up costs for your business
  • Assets that can be written off like company cars
  • Expenses on an investment such as rental property
  • Choosing The Best Home Loans For Self Employment in Melbourne

    Self-employed borrowers have a few extra hoops to jump through when applying for a home loan, but it’s still possible to get approved with the right preparation. By working with a qualified broker, you can increase your chances of getting the best deal for your loan. Whether you’re a sole trader, a freelancer or just leading your own business, our brokers can help you find the right lender to suit your financial needs. At Break Free Home Loans, we work with a wide range of lenders who offer home loans for self employed individuals. If you’re looking to borrow finance at a fair and affordable rate, discuss your needs with our brokers today.
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    Got Any Questions?

    If you’re looking for home loans for self employed Melbourne borrowers, talk to brokers from Break Free Home Loans. We can help you find the right lender, submit a loan application on your behalf and negotiate the best repayment terms. We have the experience to build a strong case on your loan approval and help you get the best value for your loan.

    Frequently Asked Questions

    We’re more than happy to answer anything you need to know about self employed home loans. The following are just some of our most frequently asked questions:

    Can I Get A Home Loan As Self-Employed?

    Are you self-employed and looking for a home loan in Melbourne? Applying for a loan can be a daunting task, but with the right preparation it doesn’t have to be. Self employed home loans are designed for people who are self-employed and need to borrow money to buy a property. It’s important to compare different home loans from a range of lenders to make sure you get the best deal possible.

    When applying for a home loan as a self-employed borrower, you will need to provide:

    • Tax returns for the last two years
    • Financial statements for the last two years
    • A list of your business assets and liabilities

    What Are The Requirements Of Self-Employed Home Loans?

    Income: You need to show a consistent income to be eligible for a self employed home loan. This can be done by providing tax returns for the last 2 years.

    Asset: You need to have assets to be eligible for a self employed home loan.

    Liability: You need to have a low liability to be eligible for a self employed home loan. This can be done by providing proof of income and expenses.

    Business registration: If you are self employed, you will need to provide evidence of your business registration.

    How Much Can Self-Employed Borrowers Borrow?

    The amount you can borrow with a self employed home loan will depend on a number of factors, including your income, your employment history and your credit history. It’s important to speak to mortgage brokers for self-employed borrowers who understand the loan market in Melbourne, so they can help you find a loan that suits your needs.

    Contact our team

    We love to hear from each and every one of you. Please feel free to reach out to us today!