Getting finance when you’re self-employed can sometimes feel more complex than it is for salaried employees, but it’s far from out of reach with the right preparation and paperwork. There may be a few extra steps along the way, but being prepared can help put you in a stronger position when applying for a home loan.
One of the most common misconceptions? That you need two years of financials before any lender will look at you. Some specialist lenders will consider applications with as little as 6 to 12 months of ABN history, depending on your overall financial position. More on that below.
Here, we run through some of the self-employed finance options that could be available to you.
Full documentation (full doc) loans
A full doc loan is the more traditional type of mortgage that may suit self-employed individuals who have steady, well-documented income and up-to-date financial records. It often comes with lower interest rates compared to alternative documentation (alt doc) loans.
To apply, you’ll typically need:
- One to two years of personal and business tax returns
- Notices of Assessment
- Financial statements – profit and loss, balance sheets
- If you’re a company director paying yourself a salary, payslips may also be accepted as part of your income verification, depending on the lender
Alternative documentation (alt doc) loans
An alt doc loan is a type of mortgage that may suit self-employed individuals, freelancers, or business owners who don’t have the usual paperwork required for a standard home loan.
Instead of relying on traditional documents like tax returns, some lenders may accept:
- Letters from your accountant
- Business Activity Statements (BAS)
- Business bank statements
As these loans can involve a higher level of risk for the lender, they often come with higher interest rates and fees than full doc loans. Even so, for borrowers who can’t meet standard documentation requirements, they can be a pathway into the market. Some lenders will even consider reviewing or lowering rates at a later stage once full financials become available.
What if you’ve been in business for less than two years?
Most major banks require a minimum of two years of ABN history. But that’s not the full picture. Several specialist and non-bank lenders will consider applications with 12 months of ABN history – and in some cases as little as 6 months – provided your deposit is strong, your credit history is clean, and your business income is consistent.
This is where working with a broker makes a real difference. A broker can help you identify lenders open to newer businesses and show you how to present your application effectively.
How can you optimise your chances of success?
Get your financial records in order
Up-to-date, accurate financial records make the application process smoother and give lenders a clear picture of your income. If your records are patchy or overdue, fix that before you apply.
Keep business and personal finances separate
Lenders reviewing your bank statements want to see clean, clear income flowing through your accounts. Mixing business and personal finances makes that harder to assess and can work against you.
Build your deposit
A larger deposit reduces the lender’s risk and may improve how your application is assessed, depending on the lender’s criteria.
Review your existing debts
Reducing debt levels prior to applying may assist your borrowing profile, though this will depend on your individual circumstances and credit history. It’s worth discussing before making any changes.
Seek professional advice
Navigating lending as a self-employed borrower can sometimes feel complex, which is why having the right support can make a difference. A mortgage broker with experience in self-employed home loans can help guide you through the process and connect you with lenders that may be a good fit for your situation.
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