If you run your own business then you may have already looked into obtaining a low-documentation mortgage, which is a common loan for the self-employed. It means you are able to access lending with less paperwork, but with a few extra measures in place, like a lower loan value ratio and slightly higher interest than a typical loan. But before you get into that, you need to make sure your business is all ready to go! So what do you need to have in place?
Paper, paper, paper
Unfortunately yes, it is a low-documentation loan and not a no-documentation loan. If you’re self employed your loan application will likely have to include the last two years of financial statements for your business, as well as details of when you filed tax returns. These could need to be verified by the Australian Taxation Office, and you may also have to be GST registered. If this sounds a bit much, you can check with a broker to see what you need to do – you may already have the documents you need and not know it!
The money in the bag
When it comes to self-employed people, lenders generally work with a lower loan to value ratio (LVR) of about 80 per cent, meaning you will have to make a deposit of 20 per cent of your total home value. This isn’t a slight against your credibility: Self-owned businesses can have sporadic payment times and a lower LVR protects against this. On the other hand, it means your total amount that you borrow will be less. You can always go higher than the set LVR you wish – it is a long-term plan, and the sooner you get to pay off your home loan the better.
Expertise by your side
If you don’t feel comfortable with your preparations for a self-employed home loan, brokers are always available to provide advice. We can take a look at your documentation and give advice on how much you will be able to borrow, and point you in the direction of the best loan for you.
You can contact a Smartline Mortgage Adviser on 13 14 97 for home loan advice. Or complete our call request form and we’ll call you!