Simpler Self-Employed Lending Policies!
If you are self-employed, firstly congratulations on being your own boss! Secondly, did you know recent changes in the lending space have now made it much simpler for many of you to access a home loan? Read on to find out more and how these changes might benefit you.
What most self-employed think about obtaining a loan
I know from experience that many self-employed people are not aware of the many existing policies and options available to qualify for a home loan.
The usual thought process I hear is something like, “I need to have been in business for at least two years, have financial statements prepared, my personal tax documents and statements for all my expenses/liabilities…it’s all too hard and stressful for me right now…”
Often this person might wait longer than they have to, or needlessly put off applying all together.
The usual approach to self-employed lending
While the above scenario and thought process has some elements of truth to it, it is not the full story. I will however agree, while it has been a little more complicated than if you were a PAYG employee, it is still easier than most of my clients initially thought before we discussed their situation together. And thankfully, things have now just tilted a little more in your favour with more with more ways than ever to obtain lending!
New and easier policies available
Recent policy changes have simplified lending for many self-employed. Below I summarise 3 of these new products and the changes of note:
1. New income verification method – PAYG wage via own business
If you are paying yourself a regular and consistent wage from your company, there are lenders that will require as little as just 3 months of payslips.
Useful for those of you with complex financial structures or do not want to show your financials.
Other requirements include:
Applicants must not require LMI (i.e., have their 20% deposit/equity available)
ATO Income Statement confirming a minimum 3 months YTD income
One payslip dated within 60 days
This policy is not available to Company ATF for trust.
2. Growing faster than your financials reflect.
If you are a fast-growing business and your financials are not a true reflection of your current position, you now have options!
I have access to multiple lenders who now lend based on one year of financials should you be able to satisfy their other usual requirements. This is a big win!
Additionally, there is one product available that will also exclude any company debts from your application servicing, making a significant difference to your lending capacity if your business has any liabilities.
3. Path of least resistance.
A super simple application whereby the income is verified simply by providing your last two years Notice of Assessments. Maximum 80% LVR (20% deposit or equity)
This is particularly helpful for those with a lot of lending within your businesses and the thought of providing statements etc. for the liabilities is just too much.
Again, there are several lenders that offer with slightly varying policies to choose from based on your personal circumstances.
How can these new policies help you?
These new products can help in many ways, especially when it comes heavily reduced paperwork and quicker turnaround times. Lesser discussed, but by no means less important additional benefits, include wider accessibility to lending, not missing out on an opportunity or your dream home, accessing the market at a more suitable time, improved business flexibility, and many more flow on benefits.
Stay tuned for my upcoming newsletters with some real-life examples illustrating how each of these products might compare with the regular style of self-employed lending.
Want to discuss your situation and possible options?
I have run my own small business on the Sunshine Coast for almost 10 years and have a passion for navigating finance for the self-employed. If I can’t help you qualify for the lending you need right away, I will most certainly be able to help you set a course to get you there sooner.
Please give me, or one of my team at IKTB a call!