19 Oct 2016
How to Get a Loan If You’re Self-Employed
Sometimes, a standard home loan package simply doesn’t apply. If you have bad credit, are self-employed or new to the country, a standard home loan might not be right for you.
Fortunately, there are alternatives. Low documentation (or low doc) home loans are designed for those who can’t provide typical tax returns and financial statements – such as investors or the self-employed.
Typically, these loans come with higher interest rates. But after a few years of on-time repayments, those rates can drop. If you’re in one of the following categories, a non-conforming “low doc” home loan might be the perfect solution for you!
Investors
Investors don’t always have regular incomes or employment histories. As such, it can be hard for an individual in this position to prove that their budgetary situation is sound.
A low doc home loan would allow the investor to make their next investment a reality. Of course, the higher interest rates would need to be factored in. But if you’re relying on investment income to live, a low doc loan might be the best way to expand your portfolio regardless.
The self-employed
Self-employed workers don’t always have the standard documentation to demonstrate their income – at least, not in a way that satisfies lenders. If you’re a freelancer or a solo business owner, it can be tough to demonstrate exactly where your next paycheck will be coming from.
When self-employed, your income can appear inconsistent. You might even be running your business to be tax effective rather than profit-centred – another difficult position to demonstrate to a lender. A low doc loan could be the perfect solution for the self-employed individual hoping to purchase a home.
Contract workers
Contract workers are in a similar situation to the self-employed.
Sometimes, contract workers work for a portion of the year and then spread their income out over the remainder. Due to the irregularity of payment schedules such as these, contract workers could have a difficult time obtaining a standard home loan.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your home loan. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.