Finance advice
Gavin Smith

7 home loan tips for self-employed borrowers

By Gavin Smith

How can self-employed borrowers prepare themselves financially to give themselves the best chance of successfully obtaining a home loan? Here are a few tips.

Blogger: Gavin Smith, director & general manager, State Custodians

Lending to self-employed borrowers can often be complex and requires extensive knowledge of a lender’s requirements.

Full doc home loan
Some self-employed borrowers assume that because they are self-employed, they have to apply for a ‘low doc’ home loan, with a higher interest rate and alternative documentation requirements. However, depending on your circumstances, you may not necessarily have to. To qualify for a prime loan with the cheapest rates, most lenders will ask you to provide two years lodged tax returns and financial statements. This includes your personal tax returns, company, partnership or trust returns and as well as tax assessment notices.

Be careful with paperwork
As a self-employed borrower, you will most likely have to provide more information than the average borrower. This may include BAS statements, tax returns, bank statements or even a declaration from your accountant. If you are able to be quick when providing these items, it will help speed up the application process.

Lodge your tax returns on time
Lenders want to see your most recent trading history. By keeping your tax returns up to date, you are able to show the lender your most recent income history whenever you are ready to apply for a home loan. It will also improve your chances of being able to apply for a full doc loan, which has more competitive rates, compared to other self-employed home loan options.

Be honest with lenders
It is important to have full disclosure with your lender. They are required to verify the information you give them and if you have not disclosed the full story it will not only slow down the process, but may affect your ability to borrow.

Improve your serviceability
Just like all borrowers, try to reduce personal credit cards and personal loans. Lenders take into consideration the limit as through it was fully drawn, so keep credit card limits to what you actually need. The less financial commitments you have, the better chance you will have at borrowing what you need.

Build a good history
Home loan interest rates are generally a lot less than interest rate on overdrafts and other business loans. If you already have a home loan and equity in your home, then you have the option of refinancing to consolidate debt, releasing cash for your business or change lenders to get a cheaper interest rate. When you go through this process, lenders want to see the past six months loan statements. If these show regular repayment history and even regular additional repayments, this will reflect positively on your application. If you are looking to consolidate business debt, ensure that you can separate this amount from the rest of your loan. You should be looking for a home loan that has loan splits or portions to keep this separate for tax purposes.

Chat to a lender who understands self-employed borrowers
If you are looking at getting a home loan, look around at lenders who have a range of loans for self-employed borrowers. You can chat to them about your business income what income evidence you are going to be able to provide. They can also advise you on your options.

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About the Blogger

Gavin Smith

Gavin Smith

Gavin Smith is Director & General Manager of State Custodians and has over 20 years’ experience in leadership roles within the banking services sector. An expert in personal finance, securitised lending and the mortgage industry, Gavin has a Post Graduate Degree in Management from the Australian Graduate School of Management (UNSW), including several mortgage and securitisation qualifications.

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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  • The pitfalls that he has seen people get into<\/li>\r\n
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    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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    • Why Brisbane is a good investment option right now<\/li>\r\n
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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1202 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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