Home Loans for Self Employed People

With changing work practices, more and more people are self employed (ie: they work for themselves as contractors or in their own business). In the past, obtaining a home loan has often been difficult for the self-employed, as they are required to prove a savings history, regular income and profit over a set period of time.� It is now much easier to get a loan and the issue is more likely to be about how much interest you are prepared to pay to mitigate your 'risk profile'.

Is it really harder for a self employed person to get a home loan?

If you have two years of profitable trading and you can meet your lender's terms for the loan you want, getting a home loan is pretty much as straightforward as if you were PAYG, as long as you can verify income. If you are not in this situation however, you may be seen as a 'higher risk' and that is where it might become more difficult, or cost you more, at least in the short term. �Make sure you talk to a local mortgage broker though as you might be surprised what is available to you.

What kind of home loans are available to self employed people?

The competitive lending market now means there is a home loan available for pretty much any situation and self employed people are widely catered for through numerous lenders offering low or no document home loans and non-conforming home loans.

Full income verification

As noted above, if you have full income verification and can satisfy lender's assessment requirements, there is no reason that you would not have access to all standard home loans.

"Self employed without up to date financials, I simply accepted what the banks offered until Anna Rimac showed me how I could be saving hundreds of dollars per month, I was astounded."

Matt (Hazelbrook), NSW

Non Standard Loans often have higher interest rates, but not always

Some lenders offer low-documentation loans at the same rate as standard variable loans, but low documentation loans and non-conforming loans are often priced higher than full-document and standard home loans and interest rates of course typically relate to the lender's view of you as a risk. (Variances are usually around 1-3% higher than a traditional loan, but rates depend on your level of credit impairment or risk).

Don't despair if you can't get lower rates immediately as increasingly lenders will revert to lower rates after consistent 'on time' repayments. �If you have been paying a higher rate on a loan for more than a year and believe you have a case for rate review, talk to your lender.� If you can't get the lender you are with to play ball, you always have the option to refinance if the savings are worth it. Also, 'regular' rates can often be achieved by paying lender's mortgage insurance.

Home Loan Features

Many no or low-documentation loans now combine all the features of standard variable and fixed-rate home loans. With some lenders, you can even borrow up to 80% of the value of the property you are buying. Access to loan features such as flexible repayment options, redraw and 100% mortgage offset on standard variable and one-year fixed-rate products are also now reasonably common. And they are available to home buyers and residential property investors.

Is there a limit to how much I can borrow?

Most mainstream banks won't go beyond $2.5 million, but quite often you can borrow more from non conforming lenders at interest rates that compete very favourably with the mainstream banks and lenders.� Talk to a local mortgage broker for your options.