In Australia over 10% of the workforce is self-employed. To many Australians being self-employed is an attractive prospect. It offers freedom from a typical work environment and your earnings can be significantly higher than a traditionally employed counterpart. However in recent years, self-employed people have found it increasingly difficult to obtain home loans. They may have a fluctuating income, or perhaps are just unable to provide the required documentation that PAYG employees receive.
Low-doc, or low documentation, loans were designed to bypass the traditional lending process. Recognizing that self-employed people cannot provide PAYG statements and have different lodging dates for their tax returns, most lenders will request that applicants provide their Business Activity Statements as evidence of income.
Even with a clear credit history and a substantial record of repaying debt, these loans can be difficult to obtain. Lenders will take into consideration the applicant’s equity and security value, among other factors, and will most likely insist upon Lender’s Mortgage Insurance (LMI) to safeguard themselves against any potential loss. Moreover, Low-docs are usually capped at a Loan to Value Ratio (LVR) of 80%.
If the applicant has a blemished credit history or has a deposit of less than 20% of the value of the property, the process becomes even more complex. No matter your circumstances, however, Urban Home Loans is here to help!
Although Low-doc loans are usually the most appropriate kind for self-employed borrowers, they are not your only option. Our home loan experts will personally assess your situation, discuss the options available to you in a private consultation, and guide you through the borrowing process. Our home loan experts operate Brisbane wide so we can cater to the busy self-employed lifestyle. Or, if you are based in Brisbane City, come into our shop front conveniently located at 267 Edward Street.
Speak with an Urban Home Loans finance broker today on 3841 3841.