Self-employed under one year - any lenders who would give us a home loan?

[littlebird]

Hi there,

just wondering if someone knows a lender, who is accepting a less-then-one-year self-employment (so no 12 month tax statements available yet - only for 10 month until end of last financial year) when it comes to a Mortgage Insurance. We've been told that a Mortgage Insurance isn't available for self-employed people when they cannot provide a full year tax statement. Thats with Westpac. Are there banks/lenders out there who are accepting young businesses?

Does anyone has an idea (or even a contact to a broker who successfully worked out cases like this) how to get a home loan or is it just not possible? Partner is employed, everything is fine - it is just this "little" paragraph in the Mortgage Insurance (Westpac)...

Thank you.

 

[Bradsdad]

What industry are we talking and what was previous job? Did one lead straight to the other?

 

[jrc77]

FYI. I got loans with CBA when I was less than 12 months self employed. However note that LVR was 80% and the self employment was in the same industry I had worked in for 10 years or so. Total loan was just over $1m.

Regards,

Jason

 

[Rolf Latham]

Hi there,

just wondering if someone knows a lender, who is accepting a less-then-one-year self-employment (so no 12 month tax statements available yet - only for 10 month until end of last financial year) when it comes to a Mortgage Insurance. We've been told that a Mortgage Insurance isn't available for self-employed people when they cannot provide a full year tax statement. Thats with Westpac. Are there banks/lenders out there who are accepting young businesses?

Does anyone has an idea (or even a contact to a broker who successfully worked out cases like this) how to get a home loan or is it just not possible? Partner is employed, everything is fine - it is just this "little" paragraph in the Mortgage Insurance (Westpac)...

Thank you.

Worstpac isnt ideal for self employed even with 10 years history

ta
rolf

 

[Deltaberry]

We've been in business for over 30+ years and our private banker advised we better fix our loans (even though our LVR is under 30% and enormously positively gearing), in case the bank tries to call our loans.

 

[tobe]

Hi there,

just wondering if someone knows a lender, who is accepting a less-then-one-year self-employment (so no 12 month tax statements available yet - only for 10 month until end of last financial year) when it comes to a Mortgage Insurance. We've been told that a Mortgage Insurance isn't available for self-employed people when they cannot provide a full year tax statement. Thats with Westpac. Are there banks/lenders out there who are accepting young businesses?

Does anyone has an idea (or even a contact to a broker who successfully worked out cases like this) how to get a home loan or is it just not possible? Partner is employed, everything is fine - it is just this "little" paragraph in the Mortgage Insurance (Westpac)...

Thank you.

Welcome!

Very dificult, unless there is some more to the story. Exeptions might be where you are basically subcontracting to the previous employer, or where you had been previously self employed in the same industry, or perhaps where all of your work relied on one water tight contract from a large well established business etc.

There may be some non bank lenders who would consider your business transaction account rather than tax returns, but they would charge a higher rate.

 

[tobe]

just as an aside, it always strikes me as odd when people in new businesses want to get high LVR loans without 2 years history.

Didnt they read the large print when they signed up to owning a business that said they would work like slaves for the first 3 years, and might crack a profit in the 3 year but be sued by ex employee's/contractors/suppliers/landlord and go banktrupt?

 

[Rolf Latham]

We've been in business for over 30+ years and our private banker advised we better fix our loans (even though our LVR is under 30% and enormously positively gearing), in case the bank tries to call our loans.

Id guess thats as a result of having ones biz banking tied together with personal and investment stuff ?


ta
rolf

 

[Brady]

Some more info is required.

You shouldn't have any issues if you were in the same industry previously.

Alot will depend on your overall application, if mortgage with partner (do they work etc), overall LVR, how tight is servicing.

 

[Aaron Sice]

FYI. I got loans with CBA when I was less than 12 months self employed. However note that LVR was 80% and the self employment was in the same industry I had worked in for 10 years or so. Total loan was just over $1m.

Regards,

Jason

+1 here too. my required LVR was 70% though, which during the course of my loan fell to 60% and is now back to 80%.

i'm at 65%, so not really bothered, but it's been ineresting to see the changes.

 

[Aaron Sice]

just as an aside, it always strikes me as odd when people in new businesses want to get high LVR loans without 2 years history.

people find that the more favourable tax structures mean they can afford more.

 

[jrc77]

people find that the more favourable tax structures mean they can afford more.

But the banks don't recognize the income and you can't borrow ... Better able to afford it but can't meet servicing criteria!

 

[M.Investigator]

I have been a self employed person myself, and I agree that it can be difficult getting over the hurdle of a loan.

Have you tried out a credit union? I went with them when I first started out, but that was after I had been in business for at least 2 years.

Or another way that you could increase your persuasiveness to lenders is perhaps showing proof of contracts that you have in your business? What kind of business are you in? If you have 12 month or longer contracts with your clients, then lenders may be able to use that to be able to feel confident of future income for you.

A mortgage broker helped me out, so you may like to get help from one, although not all mortgage brokers may be able to help you (or want to help you), thats from my experience...

 

[Aaron Sice]

But the banks don't recognize the income and you can't borrow ... Better able to afford it but can't meet servicing criteria!

the add-backs change, therefore increasing serviceability.

your biggest issue will be LVR.....!

 

[Rolf Latham]

I have been a self employed person myself, and I agree that it can be difficult getting over the hurdle of a loan.
.

I disagree with this

Self employed isnt an issue at all, thats a misnomer really/

Proof of reliable income is the real issue, not the source of the income.

Had a client call me today to chase a new loan for a refi, self employed.

WHen I asked the q on 2 yrs rtns *( coz we DONT do lo doc of any description anymore) yea we have em, but they show a 40 k loss............

Many Self employeds are their own worst enemy ,but then blame the lenders orthe regulatory environment for liquidity issues.

Either pay some tax, and be able to get a normal loan, or continue to operate a business that is either a dog, or is dodgy with cash components.

PS. this isnt a rant against the initial poster, just a general observation and WARNING !

ta
rolf

 

[Shahin_Afarin]

I think matthew was referring to the restrictions that exist with people who are newly self employed more than anything else. Valid points though about income. Unfortunately I deal with a lot of business owners that want finance and have declared a very low income making it difficult to get finance.

 

[Aaron_C]

Unfortunately I deal with a lot of business owners that want finance and have declared a very low income making it difficult to get finance.

True. I just tell the ATO I will be paying my tax in instalments, makes things a lot easier

 

[Rolf Latham]

Unfortunately I deal with a lot of business owners that want finance and have declared a very low income making it difficult to get finance.

In the old days, they would whinge about the 1% risk fee margin they would have to pay on lo doc.........

my response for the alats 12 years hasnt changed...........pay the tax or pay the margin, xcept now on reality the margin is closer to 3 % to get a some form of lo doc that doesnt rely on "real" evidence.

My best over the last 12 years os the resto owner with a 300 ish k porsche, with a net 25 k income wanting to buy a 2 mill home with a 600 k deposit...............so which box do I tick again ?

contact ATO

 

[Aaron_C]

My best over the last 12 years os the resto owner with a 300 ish k porsche, with a net 25 k income wanting to buy a 2 mill home with a 600 k deposit...............so which box do I tick again ?

contact ATO

Hehe I think the ATO will be giving him a call quite quickly even without you notifying them

 

[Brady]

Often find self employed wanting there cake and eating it too.

Declare low income as dont want to pay large tax

Want to borrow large amount on income that wasnt declare,

usually comes with large deposit (couple years worth of tax )