Cheers, if you are self-employed! Being self-employed can be beneficial. Whereas, many people perceive that being self-employed can also be full of risk. And it’s true in many cases. But, it doesn’t mean that anyone who is self-employed can’t buy a home of their own. Low doc loans are specifically designed for the self- employed and can make it easier to buy a home. Low doc loans solve many of the issues self- employed people face with normal lending criteria.
Also, a misconception is that borrowers need to pay a higher rate of interest if they are running their own business. That’s a myth. Let’s look at how one can become eligible for a low doc loan when he/she is self-employed.
There are a few factors that borrowers need to consider if they want to secure a low doc loan:
Get your affairs in order
Getting your records and documents right is extremely important when you’re applying for a low doc loan. In this case, you need to declare your business earnings and substantiate with supporting documents. Loan lenders may ask you to present BAS statements, bank account statements, an accountant letter and in some cases one or two years tax returns to verify your declared income.
Your business should also have held an ABN for a reasonable period, ideally two years, but in some cases, an earlier period can be accepted. In most cases, the ABN would also need to be GST registered for the corresponding period.
Crunch your numbers
Your business records should be well-managed. Mistakes can directly impact your reputation and also impact your borrowing potential. Loan options and availability depend on the information you provide to lenders. Lenders will evaluate how capable you are to repay a loan with their affordability calculators. They will also examine your credit score.
Know your options
No matter which business you run, there should be a low doc loan option for the self-employed business entrepreneur. Don’t worry if you are a contractor, builder, retailer and any other business owner, you will find a suitable option for your funding. There is no lack of options for the self-employed. Low doc loans are designed for self-employed people and offer flexible options.
Maintain your taxes and debt records
Keeping your tax business activity statements up to date and presenting those during the application process could be the most important factor for the self-employed borrower. Good tax records lead to competitive low doc loan products.
Strategize your loan repayment methods
The last but the most important thing is to make a strategy for the loan repayments. Make plans on how you’re going to manage your loan repayments with your business cash flow. If you are not comfortable with the terms, discuss options with the lender before finalizing any finance.
Focus on what you need before requesting a low doc loan. It’s important you have a close look at the documents required. This should help each self-employed individual position themselves for a suitable low doc home loan.