Are you self-employed? In the past, banks viewed self-employed borrowers as riskier because their income may not be as stable and they often don’t have the ability to provide the depth of information usually required to apply for a home loan. Times have changed though and banks are becoming more accepting of self-employed borrowers. The most common issue for self-employed applicants is that their accountants are too good at reducing their taxable income, which is great at tax time, however can come back to bite you when it comes to applying for a loan. Lenders and of course brokers are under pressure to ensure an applicant is able to meet the required servicing requirements.
TSC Mortgage Brokers mortgage broker top tip if you are self employed
- Do your research! Speak to a mortgage broker well before you make any major financial purchases as there are a lot of different things to consider that may adversely affect your home loan application, particularly when you’re self-employed. Understanding important things such as:
- How different lenders might calculate your income – yes they ALL use different methods to interpret what they believe you are earning.
- Add backs – some expenses are ‘one-offs’ and may be added back, which can increase your assessable income. All lenders are different, but these add backs might include depreciation or additional superannuation contributions, for example.
- How the lenders view your self-employment history if it’s under a year, or between one or two years. Having access to over 30 lenders gives us the power and knowledge to choose a lender that is going to suit your needs.
Frequently Asked Questions
Yes — self-employed borrowers are well-catered for by Australian lenders. While the documentation requirements differ from PAYG employees, many banks and non-bank lenders offer competitive products specifically for self-employed applicants.
Typically the last 2 years of personal and business tax returns plus ATO Notices of Assessment, 6 months business bank statements, business financials (P&L and balance sheet), and BAS statements.
A low-doc (low documentation) loan allows self-employed borrowers to use alternative income verification — such as an accountant’s declaration, BAS statements, or 12 months bank statements — instead of full tax returns.
Lenders typically average the last 2 years of taxable income. Some allow ‘add-backs’ for genuine once-off expenses, depreciation, and other non-cash deductions to arrive at a higher assessable income figure.
Some specialist lenders will consider applicants with as little as 6–12 months of ABN history, particularly if they were previously employed in the same industry. Expect higher rates or stricter LVR limits.
Full-doc self-employed borrowers who can provide 2 years tax returns often access the same rates as PAYG borrowers. Low-doc loans carry a small rate premium (typically 0.3–1% higher) due to higher lender risk.
A broker understands which lenders are most self-employed friendly, how to present your income for maximum assessment, and which low-doc products are competitive. This expertise dramatically improves your approval chances.
