Self-employment is a common aspiration among Australians, as along with the financial and lifestyle rewards it can bring, you are your own boss! Not to mention the significant personal satisfaction.
“The dream is, in fact, already being realised by many”
The dream is, in fact, already being realised by many. According to the the Independent Contractors of Australia’s compilation of the most recent Australian Bureau of Statistics figures, more than 17 per cent of our workforce is self-employed, equating to about 2 million people.
However, because of the lack of a consistent income, it does take hard work, planning and careful management of your money. The sometimes erratic money-flow that is synonymous with self-employed buyers can often prove to be an impediment when it comes to sitting down with your lender for a home loan approval.
Considering self-employed home loans? Here are a few ways you can get your foot in the door.
According to a report from Standard and Poors, lo-doc loans were essentially designed primarily for self-employed buyers, with less documentation required for approval and, consequently, higher interest rates and fees than other mortgages.
The reason? Lenders see you as a greater risk because your lack of paperwork is unable to completely reassure them that you will be able to make repayments. Hence, they increase the rates to act as insurance in case you are unable to make your repayments.
Make your credit history attractive
The Australian Securities and Investments Commission recommends ensuring your finances all up to date and in order, like your income tax returns and any financial statements.
A fluctuating income is likely to disconcert most lenders. Despite this, if you can show at least two years of records of healthy annual revenues, you may be equipped to secure a home loan with competitive rates. It may take some time, but the potential savings will make it worthwhile in the end!
Use an expert
The Australian Bureau of Statistics asserts that on a monthly basis, there are around $32 billion worth of residential home purchases. If you’re a self-employed buyer and you would like to move a rung up the property ladder, it might be time to talk to an expert.
A mortgage manager can help you compile your financial statements before pairing you up with a unique loan that is tailor-made to your specific circumstances. If you would like to know more, get in touch with the team at Mortgageport.