Finance for the self emaployed !!!!



From: Anonymous

Here's a curly question for the finance brokers & others in the know on the forum.

Banks refuse to give me normal finance terms
without good financials. If I provide good
financials, then I will be paying a heap more in tax and there fore really defeats the purpose !

To get around this self employment problem,
I am thinking of restructuring my business profits so It looks like I am an employee of a separate entity not connected to me in any way.

Comments please, others must have had to do this in the past? I am not really being dishonest as you are still earning the income claimed, but it just appears in a different way .

Question : If I can provide letter from my employee, pay slips, year to date figures, & provide a contact phone number etc.

1-What is the chance the financier will ring to check my employment?
2-What is the chance the financier would request a past group certificate or tax returns?

A pissed off self employed person !
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Reply: 1
From: Rolf Latham


You cant have it both ways Im afraid !

If you want to be treated by the lenders as a PAYE person then this comes with the pain of paying that level of tax.

Depends on what you are trying to achieve - there are plenty of lenders that will do no or lite doc loans to "reasonable" lvrs, at not bad rates.

In regard of who will want to check what - assume they will want to check everything. If you are a director of your own company you will find it especially fun going through the normal channels.

Seek out a good independent mortgage broker. He/SHe will solve thos one for you quickly.


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Reply: 2
From: Steve Cockrane


It is possible to get a home loan without substantiating income through tax returns etc, there are a number of loan products for this purpose. The lender gets you to sign an income declaration and loan serviceability is worked on this figure. LVR is usually limited to about 75% and a premium interest rate may be charged.
A mortgage broker can step you through this type of loan.

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Reply: 2.1
From: Anonymous

Thanks for your posts on this subject to date.

Note I am aware of the "no docs or lite docs"
loans with there interest rate at 1-2% above the normal & the restrictive LVR% limited to 75-80%.
Some will go to 85% but at rates above 9.5% !!!

I just need and want access to "normal" finance, I am sick of being ripped off just because I got of my butt and took control of my own situation and became self employed.
Mr self employed
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Reply: 2.1.1
From: Victor Mann

There are lower rates for 85% ...about 8.10%
with accountants letter to substantiate ability to repay. not all lenders can/will loan on code loans (owner occupied) some will.
There are some lenders that can be accomadating depending on lvr (say no more than 80%)

But before any broker can provide you with concrete assessment you need to provide adequate details.
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From: Victor Mann

apologies on some info on my previous post that lvr was only 75% @ 8.10 but they will do code loans.
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Reply: 3
From: Victor Mann

well wow the power of thought...just got an email from one of my lenders

no income verification from 6.65% 76% lvr
I am waiting on details..........self employed and payg

lenders are getting desperate for business.


Good Hunting!!!!
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Reply: 4
From: Dale Gatherum-Goss


I take the view that you need to educate your banker (did I spell that right? I sometimes use a W as a freudian slip . . .) about your income as a self employed person.

For example, I would attach a reconciliation explaining that your taxable income is after taking into account what could be normally thought of as personal expenses such as cars, telephones, gifts, wages to associates, electricity for your home, and the myriad of expenses that the tax law allows you to claim as a self employed person.

This way, the bank does not take them into account twice and penalize you. A letter from your accountant confirming this will also carry some weight.

One last thought though, the tax office use bank records as a way of catching you out, so, please be very careful what you tell the bank about your income. It may be used against you one day.

I hope that this helps

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Reply: 4.1
From: Debbie .

I agree wholeheartedly with Dale, but will add my own story.

Self employed and wanting to buy first IP I saw my local bank that at the time had the best facility for me.

I arranged an appointment with their mobile lender who told me that with my taxable income it would be near impossible to get a loan, and no they could not include income from Family Allowance, depreciation etc.

Feeling dissillussioned, saw another bank (sorry cant remember the name, but not a major one) who said not a problem, submitted application and was approved. Their interest rate was about 1% higher than original bank. I think I had to give a breakdown of personal expenditure for this.

Then rang back first bank and told the mobile lender that I didn't want to waste his time, as I had approval from another bank so would like to cancel my appointment.

His reply: "Don't you want to see what we can do for you?"

After that got approval from first bank with an extra $10000 to make minor reno to property.
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Reply: 4.1.1
From: Anonymous


A friend of mine is self employed as well, but has managed
to win a way around this problem.
Yes. He had to lie his ass off and create
great contacts at his fake full time employment for it to succeed.
Timing on purchasing properties is an issue
as well ie. Avoiding Group certificates.
Inform the bank around Oct you have had the new FT Job since July, that way you have passed the 3 month trial period(After your previous Tax return & Group Cert was issued)
Remember you started the new FT job this Fin yr. They dont need any Tax Returns for the new F/T Job but will be more lenient on you.
You just need proof of wages slip & Letter from employer (Easy).

Another Idea? Not tested yet but.
Use your buddy's company P/L and pay yourself
a wage from it.
You'll have to work out a deal with him though. Maybe a Free Dinner every month?
But well worth it when the bank loves you.
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From: Dirk Sanchez

Sounds like a very sexy idea anonymous
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Reply: 5
From: Dale Gatherum-Goss


I am concerned that you would buy IP's in your name when the business is also in your name. This leaves both at risk and is something that we would normally work to protect against.

Therefore, it is for a good commercail reason that you would consider using a company or trust through which to run your business.

You can also claim even more tax deductions!

Good luck with your approach, I hope that it works for you.

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