Home loans for the self-employed


Many lenders have a different process when approving home loans for those who have their own business or are independent traders.

Operating as a sole proprietorship in Australia represents around 8.2% of the Australian Workforce (ABS). There are over a million Australians who operate as individual entrepreneurs.

Small business is the Australian dream to many, but it’s important to understand how it affects you when it comes to owning a home. The main difference is how you demonstrate your taxable income.


Buying a home or looking to refinance? The table below shows home loans with some of the lowest interest rates on the market for homeowners.


Rate type Gap Redraw Ongoing charges The initial costs LVR Lump sum reimbursement Additional refunds Pre-approval
Variable More details

Smart Booster real estate loan at variable discount rate – 2 years (LVR
  • Fast turnaround times, can meet a 30 day settlement
  • For purchase and refinancing, minimum deposit of 20%
  • No ongoing or monthly fees, add compensation for 0.10%

Variable More details

Low rate home loan – Premium (principal and interest) (owner occupied) (LVR
  • No upfront or ongoing costs
  • 100% clearing account
  • Additional refunds + reprint services

Variable More details

Nano Home Loans Variable Owner Busy, Principal and Interest (Refinancing Only)

  • WIN your interest-free home loan and save up to $ 1.1 million. Refinancing before October 29. The T & Cs apply.
  • Refinancing only. Apply fast online, refinance in minutes, not weeks.
  • No Nano fees, 100% free cleared sub-account. Mobile app. Visa debit card and instant payments.
Variable More details

Owner Occupant Accelerate – Celebrate (LVR

  • For a chance to win $ 100,000 for your home loan, apply to Athena before October 31 and get approved by December 15
  • We reduce your rate based on the amount you have repaid on your loan
  • Automatic rate matching

Owner Occupant Accelerate – Celebrate (LVR
  • For a chance to win $ 100,000 for your home loan, apply to Athena before October 31 and get approved by December 15
  • We reduce your rate based on the amount you have repaid on your loan
  • Automatic rate matching

Variable More details

Garden mortgage (principal and interest) (special) (LVR
  • Unlimited additional refunds
  • Unlimited free withdrawals
  • Optional 100% compensation can be added for $ 120 per year ^

What Do Lenders Consider a “Sole Entrepreneur”?

An individual entrepreneur means that you have established a business and have an Australian Business Number (ABN) for which you are individually and legally responsible.

As a sole proprietor, you have the right to keep all profits after tax has been paid, but you are responsible for all losses.

Why Are Home Loans Different For Independent Traders?

Lenders are more specific in their requirements when dealing with business owners and independent traders. This is because historically these owners have defaulted more often than Pay As You Go (PAYG) employees – those who paid a regular salary.

Independent traders are a higher risk because their income may not be as stable as that of a PAYG applicant.

To protect themselves from defaults, banks are traditionally more stringent in their valuation and will often have higher interest rates or borrowing limits for independent traders / business owners.

How Do Lenders Calculate Your Income?

  • Lenders assess an individual entrepreneur’s income differently from pay-as-you-go employees.
  • Lenders can assess some or all of the following to calculate your taxable income:
  • Income from the most recent tax year
  • The drop in income over the last two tax years
  • The average income of the last two tax years

What will lenders ask for?

Different lenders have different requirements, but standard home loan approvals for independent traders will require:

  • The last two years of tax returns
  • Profit and loss accounts of your business
  • Two years of Business Activity Statements (BAS)
  • Proof that your ABN has been registered within the last two years

Other key information that will help you access a mortgage as an individual entrepreneur:

  • Bank account statements
  • Details of personal and / or credit loans and debts
  • Existing investments (stocks, term deposits)
  • Existing assets (like a car)

How Much Can You Borrow As a Business Owner?

Some lenders will allow you to borrow up to 95% of the value of the property if you provide two-year tax returns completed with Tax Notices (NOA) and Australian Business Number (ABN) returns two years.

Having these documents when applying means you could access more competitive rates.

If you cannot provide these documents, lenders will allow you access to 60-85%, depending on their individual needs. This is called a low doc home loan.

What if I only recently became an individual entrepreneur?

A low doc loan is an alternative for those looking for a home loan who have not had ABN established as a sole trader for two years.

Different lenders will have different requirements, but some offer low doc loans under unique circumstances.

Independent traders who have more than seven years of experience in their field may be eligible for a low doc loan even if they have only recently started operating their own business.

Case study:

Alfonso Letrader is a carpenter who has recently started his own business within the past 12 months.

Because his ABN is less than two years old and he doesn’t have two years of taxable income for a lender to see, he can’t get approval for a traditional individual merchant home loan.

However, Alfonso has been working as a carpenter for twelve years, completing his apprenticeship, and then working as a licensed carpenter for a large construction company.

This experience can be taken into account by lenders in order to approve a low doc loan.

See also: businesses prioritize home ownership over business creation

Tips for finding a mortgage as an individual entrepreneur

There are other strategies for independent traders to be as prepared as possible when applying for a home loan:

Separate work and life

As an individual entrepreneur, it is important to provide your lender with clear financial information. It should be clear which expenses are related to the business and which are personal.

Savings.com.au recommends speaking with a professional to make sure your personal and business finances are clearly separated.

Reduce debt

Personal debt, like your credit card, can affect your borrowing power.

The lower your unpaid debts, combined with a good credit history, the more likely you are to get your home loan.

It is imperative that you show a lender that you are able to manage and cover your existing loans and debts.

It is important to know that even for the most experienced individual entrepreneur, each lender will have their own assessment when approving such a home loan. It is important to seek financial advice when preparing a loan application and to get your house in order before you apply.

Image by Fahmi Fakhrudi via Unsplash

The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes the retail products of at least the Big Four Banks, the Top 10 Customer-Owned Institutions and Australia’s largest non-banks:

Products from some vendors may not be available in all states. To be taken into account, the product and the price must be clearly published on the website of the supplier of the product.

In the interest of full disclosure, Savings.com.au, Performance Drive, and Loans.com.au are part of the Firstmac group of companies. To learn more about how Savings.com.au handles potential conflicts of interest, as well as how we are paid, please click on the links on the website.

*Comparison rate is based on a loan of $ 150,000 over 25 years. Please note that the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as draw charges and cost savings such as fee waivers are not included in the comparison rate but can influence the cost of the loan.

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