The self-employed workforce is bigger than ever in Australia, and still growing. More people are finding work through freelancing or in the gig economy, or pursuing passion projects like starting a small business or opening a food truck.
Yet some of these workers may feel that being self-employed puts them at a disadvantage when it comes to getting a mortgage. That’s far from the truth. Finding a home loan with the right terms and rates is still possible if you’re self-employed it might just take a little extra work.
Here are some things to be aware of when shopping for a mortgage when self-employed:
The largest hurdle any self-employed person will face in getting a mortgage is in organising the documentation needed to prove income or assets. This is an especially hard part because self-employed workers may have multiple sources of income, or have other forms of compensation.
It’s important to tackle this document organisation proactively to ensure your homebuying process gets off to the best start possible. Try to save payslips and other official statements proving income, and get your tax records in order at the same time. Other materials to keep sorted include:
Lenders take on risk when they make a home loan, and a borrower without steady income might see higher rates or be denied for a mortgage.
If you have less than a year’s worth of experience as a self-employed worker, your options may be limited. Most lenders do not see this as sufficient time enough prove stable income; however, if you have two or more years, you’ll generally have better standing in the eyes of lenders.
A low documentation loan is a specialised type of mortgage that can be made without the same requirements. The self-employed often favour low doc loans because the process reduces the paperwork burden in applying for a loan.
While the structure of the low doc loan may differ from lender to lender, self-employed borrowers generally need:
There are many mortgage options out there for self-employed borrowers, so take time to research your options.
Want to talk more about buying and selling a home? Contact Ray White Surfers Paradise today.