Self employed finance

[Williamyuan]

I have been working self-employed since 2008 in the sales industry, but in the previous financial year did a brief stint as an employee(also in sales industry), and am now working self employed again in similar job. I want to use 2 years tax returns to apply for finance as self employed, but mortgage broker has advised I cannot use previous tax returns for self employed finance, as I have to have worked self employed the full period straight with no employee positions in the last 2 years.
Is this correct, or can I still get finance? Also I have been advised on somersoft that some lenders will lend on one years tax return, but I suppose since the employee job was in the 2011-2012 financial year that would still be an issue with these lenders?

Also, I assume most people will reply 'ask your broker', so please tell me if you have a specific broker you recommend. My current broker was helpful in getting my first loan, but is a bit offhand now ( probably because I'm now wanting a smaller loan around $160-180k for Nathan/Skater's area). Mortgage brokers experienced with smaller loans please nominate yourselves, and sorry for the long post!

 

[Shahin_Afarin]

That's not correct - as long as you have the 2 year full financials thats fine. It doesn't matter if you worked as a PAYG during this time. Getting a lender to accept 1 year self employed is hard so if you have 2 years and servicing adds up then it should be ok.

 

[Brady]

I would be looking for a different broker/banker.

You shouldnt have any issues using the last 2 years financials, maybe even bring in the year before (when you where in the same industry). This should mitigate any issues, 1year financials should be ok.

Might have to be assessed by 'head office' and take a few days extra, but shouldnt have any issues around the financials.

 

[Peter_Tersteeg]

I guess this would come down to the specifics of what you were doing previously, what your PAYG job was and what you're doing now. If you're going back to your old business than it shouldn't be too difficult to qualify for finance. It also might depend on how long you've been self employed for again, perhaps backed up with BAS statements to show you're doing well.

Essentially lenders want reassurance that your current employment is sustainable.

Keeping the LVR to 80% or lower would also be a huge help, it gives lenders some flexibility.

There are also a few lenders who are more flexible and can rely on only the most recent financial year.

 

[Rolf Latham]

Many a lender will overlook the PAYG component if there is logic there, AND the work is similar.


To help with your submission, it will be handy to have your quarterly BAS over the previous 2 to 3 years to show consistency of income either side of the PAYG period

Some lenders will extract the PAYG income from the financials, so you need to be a good position to prove otherwise

ta
rolf

 

[Aaron_C]

Your broker is incorrect. Depending on what's in the tax returns, it can be done. Have done it plenty of times.

 

[tobe]

I can see where this broker is coming from. I have this query a lot, where employment history is a mix of self employed, PAYG, sole contractor.

While its possible an assessor might be able to extract the PAYG income and average the remaining income over 2 years, if they are in the same industry blah blah...

HOWEVER, lets think this through, why would a successful self employed person go back for working for the man? Cause they werent making any money. Why would they quit and set themselves up again as self employed? Cause they got fired, or cause they had enough work to set themselves up self employed again.

In these cases, the financials never look any good. This is why the broker 'passed' on the deal.

the only real exception might be property sales agents, and builder reps. Each developer/agency either employs contractors or has them PAYG plus commssion. Explaining you left builder y to work for builder x as a sales rep and builder x only employs contractors is a plausible exception.

 

[Rolf Latham]

the only real exception might be property sales agents, and builder reps. Each developer/agency either employs contractors or has them PAYG plus commssion. Explaining you left builder y to work for builder x as a sales rep and builder x only employs contractors is a plausible exception.

As the economy continues to evolve, even traditionally stable areas for contractors like IT, means that many folks will need to mix PAYG with SE........

Over time lenders will become a little more understanding ( maybe) as they have become with casual based PAYG employment

ta
rolf

 

[Shahin_Afarin]

I have a fair number of clients that have had their self employed business for many years making good money but they are also doing PAYG contracts in between. In really depends on the industry. A lot of these/my clients are in marketing and advertising. It seems to be short stints but large invoices.

 

[Aaron_C]

HOWEVER, lets think this through, why would a successful self employed person go back for working for the man? Cause they werent making any money. Why would they quit and set themselves up again as self employed? Cause they got fired, or cause they had enough work to set themselves up self employed again.

Fair point tobe. All depends on the numbers of course.

 

[Marty McDonald]

I agree with Tobe I don't think lenders are as flexible as many are making out.

You really need to put a good argument together supported with more than the minimum documentation AND a good broker / banker who understands your situation and position and can therefore demonstrate WHY a lender should approve your loan.

You can't polish a turd if the deal is no good when you really look at what's going on then forget it; come back when your figures back up your claims.

 

[Brady]

I agree with Tobe I don't think lenders are as flexible as many are making out.

You really need to put a good argument together supported with more than the minimum documentation AND a good broker / banker who understands your situation and position and can therefore demonstrate WHY a lender should approve your loan.

You can't polish a turd if the deal is no good when you really look at what's going on then forget it; come back when your figures back up your claims.

If the loan services on his last years self employed income, is a decent application, deposit/lvr, commitment level, accountant conduct... Then it should be as easy as everyone is saying. I'm speaking from personal experience and assuming on the experience of the other they are saying it's that easy because they have likely done it before like I have.

If it services on the 1 year and he was in same industry why wouldn't someone lend to him if the rest of the application made sense.

 

[Marty McDonald]

Brady.....If you read the OP again he is saying he did PAYG work in the "previous" financial year. I am taking that to mean the 2011-2012 tax year. If his most recent tax figures are 2011-2012's then that is a whole lot different to having some PAYG income from 2 years ago and a full years SE to assess. Most lenders would have no choice but to exclude the PAYG income in the last years figure....still so easy?

 

[Shahin_Afarin]

I think where Brady (and myself) are coming from is that we interpreted the 'brief stint' Will did as something he did whilst he was still self employed, i.e. he would still have decent figures for the previous year. Perhaps Will can jump on and clarify. If he went from self employed one financial year then to PAYG the next financial and then back to self employed the next year then this is obviously an issue.

 

[dexx]

Can anyone recommend a lender who is self-employed friendly? I have a friend who is a PAYG salary earner. His wife is self employed as a sales consultant for a direct-sales company. Even though she's earned good money for two years, Westpac doesnt want to know them as shes not on a fixed income.

 

[Aaron_C]

Can anyone recommend a lender who is self-employed friendly? I have a friend who is a PAYG salary earner. His wife is self employed as a sales consultant for a direct-sales company. Even though she's earned good money for two years, Westpac doesnt want to know them as shes not on a fixed income.

If you want you can try a lender who only looks at most recent year financials such as St George and ANZ. Perhaps ask your friend to consult his broker about what options there are. Maybe he doesn't even need her income to service.

 

[Brady]

I think where Brady (and myself) are coming from is that we interpreted the 'brief stint' Will did as something he did whilst he was still self employed, i.e. he would still have decent figures for the previous year. Perhaps Will can jump on and clarify. If he went from self employed one financial year then to PAYG the next financial and then back to self employed the next year then this is obviously an issue.

Clarification will defiitely help.

Was this stint for part of the financial year?

Was it 2010-2011 or 2011-2012?

Have you completed any BAS for this financial year?

 

[Brady]

Can anyone recommend a lender who is self-employed friendly? I have a friend who is a PAYG salary earner. His wife is self employed as a sales consultant for a direct-sales company. Even though she's earned good money for two years, Westpac doesnt want to know them as shes not on a fixed income.

Im guessing if she has earnt good income for 2 years that they werent financial years? guessing 2 calander years?

Has she completed BAS which can be used to assist.

 

[Rolf Latham]

Can anyone recommend a lender who is self-employed friendly? I have a friend who is a PAYG salary earner. His wife is self employed as a sales consultant for a direct-sales company. Even though she's earned good money for two years, Westpac doesnt want to know them as shes not on a fixed income.

Hi Dexx

Worstpac is the last lender id use for a self employed income, they dont understand. Unless the lvr is at 80 % and the borrowers dont have Ips

What is the lvr, because that will determine what may work best

ta

rolf