As a self-employed individual, you may face difficulties in obtaining a home loan. Why? Because it typically requires extensive documentation and requirements that you may not meet, including tax return reports and payment information.
So, how do you circumvent this complicated process? Is it possible to get a home loan in Australia, as a self-employed individual? Of course it is! The procedure is different, and there are some things to keep in mind, but that is something we can help you with so that you can have the best chance of obtaining your dream house.
Low documentation home loan – what it is and why do you need it?
If you are self-employed, you may find that you do not possess the documents usually required for home loans, such as proof of income documents. That is why, in order to be able to apply for one, you have to opt for a low documentation loan (or low doc). You will need this official form because it encompasses the necessary information concerning business activity, official statements, income declaration and registration for GST.
What deposit does a low doc home loan require?
Generally speaking, the majority of lenders might imply that your deposit has to be convincing. Moreover, if you want to borrow more than 60 percent of your property’s value, you will be asked to pay a lenders’ mortgage insurance. In this regard, it is very important to bear in mind that this type of mortgage insurance does not shield the borrower. On the contrary – should you lose your loan, this mortgage insurance shields the lender.
In more exact terms, you will be required to present the minimum of 20 percent of your property’s overall value. For instance, let’s say that you want to borrow the sum of $500.000 to purchase an apartment in Sydney. To get approved for a self-employed home loan, you will need to have $100.000 saved for this purpose.
If you own other considerable property, the lender might take that into account as well. For this particular reason, you might be asked to provide bank statements indicating savings information and copies of further investments you hold. Another important aspect is the issue of additional costs. What are these additional costs? You need to take into consideration costs including home loan application fees, council rates, stamp duty, repayments, and ongoing fees and so on and so forth.
Can I apply for self-employed low doc loan?
As long as you are a self-employed Australian, such as a freelancer or a small business owner, for example, there is no reason why you should not be able to apply for a low doc loan. Keep in mind that you will still need some documents, including the ABN and registered business name, a letter from your accountant, business activity statements (BAS), and a self-verified income declaration, as well as previous bank statements. Generally speaking, a low doc loan is suitable for any person who cannot provide evidence of income through traditional means. If you have the necessary documents and fit the requirements, everything should be fine.