Home loans for the self employed can be made easy!
A common misconception is that being self employed makes it hard to get a home loan or finance. This is not true. Being self employed means the bank looks at your application differently when it comes to providing home loans or business finance. Common misconceptions with self employed finance are banks will ask a lot of questions and not lend to you or banks need 2 years of tax returns and do not account for the tax benefits of being self employed.
While this may be true using a mortgage broker such as What If We Finance can help you ensure you have the best possible chance of getting finance. Banks of want to lend to you but they need to understand how you make your money.
So while banks will ask for 2 years of tax returns they are add backs such as depreciation, interest and directors salaries and wages that the bank looks at before they extend finance.Your mortgage broker can package your returns in the best possible way to ensure you have the best possible chance of getting home loan finance.
Also banks do not necessarily need 2 years of financials or tax returns. This can be a blessing because if you have a bad finance year and a good financial year the bank will average your earnings and this will reduce your borrowing capacity. For example if you earned $100 in 2012 and $200 in 2013 some banks may use $100 as your income and others may use the average income over 2 years of $150. They key in this instance is to find a lender who will use the $200 as your income and this where your mortgage broker can help.
Similarly if you have a large deposit for example 35% of the property price banks may not be as strict and you can get away with one years of tax returns or relatively less information.
Finally you can still get home loans being self employed with lenders Mortgage Insurance this typically means you have a small deposit (less than 20%) but again you need the guidance of your mortgage broker to ensure you get the possible deal and have the best possible chance of approval.
The key message here is being self employed is not an insurmountable barrier and with the right guidance you can refinance your home, buy your first home or investment property sooner than you think.