Are you self-employed? Do you own your own business? Then you know the unique challenges that the administrative side of things offers when it comes to tracking your flow of income, managing accounts, and dealing with finances. It isn’t easy and the last thing anyone needs in this type of situation is a big fat no rubber-stamped on a home loan application. The biggest reason for the rubber stamp of rejection is paperwork. It sounds like all bad news, but it isn’t! There is plenty of good news for self-employed borrowers. You have alternatives.
Deal With Your Paperwork
When a lender reviews a home loan application they are looking for certain things. First of all, they want to see regular income. They’re looking for borrowers who can make repayments. You can prove you’re that candidate by providing paperwork that shows you have been self-employed for a specific length of time and that your income is regular. This will help you demonstrate your case.
Paperwork can be a challenge for the self-employed, however, which means if you don’t have the standard documentation that lenders demand a low doc loan may come to your rescue. You will still need a wealth of paperwork to secure the loan, but it’s paperwork that deviates from the norm. With a non-bank lender like Seek Mortgages, they will look at whether your business has been GST and ABN registered for six months at least, they’ll want to see an accountants letter, business activity statements, and/or business bank account statements.
Keep Track of Cash Flow
A financial plan will help you manage and track your cash flow. This is a good idea if you’re self-employed. If you pay off any outstanding debt it will have a positive impact on your cash flow, as well as your credit score. This means you will find some lenders willing to approve a higher loan amount.
Trust The Lenders Experience
You have to be prepared to be upfront and honest with your potential lender from the get-go. If there are major variations between taxable income on your financial statements from one year into the next, then be prepared to discuss the reasons. Alternative lenders like Seek Mortgages are experienced with all kinds of borrowers and are more than familiar with evaluating a wide range of cash flows.
Get Help With Taxable Income
Perhaps the biggest challenge that the self-employed face when securing a home is taxable income. You need to think about how the financial statements of today could impact your borrowing potential in the future. Your best bet is to speak to a tax professional or financial advisor when you address taxable income.
These are just a few ideas and points highlighting the flexibility of low doc loans for self-employed borrowers. You have plenty of options, whether you realised it or not. If you haven’t been successful with bank lending, all is not lost!
If you would like to learn more about low doc loans, or any other type of loans, then get in touch with us today to discuss your options.