It doesn’t matter how much you earn or how regular your income is: if you’re self-employed, that’s one more hoop you’ll need to jump through when applying for a home loan.                  

That’s not to say all self-employed borrowers will struggle getting finance. It just means you might need to work a little bit harder and pay close attention to the details.

First things first, says Johnny Sukkar, finance consultant with Mint Money: to boost your chances of getting an approval, you’ve got to make sure you know your numbers.

“Sit down with your broker or lender and establish what taxable income level you need to apply for credit, otherwise you’re flying in the dark and destined to be disappointed,” he suggests.

Once you’ve established your borrowing power and determined eligibility for finance, you’ll need to prove that your income is what you say it is.

“Information is king,” Sukkar explains. “When assessing a self-employed applicant’s eligibility for a home loan, lenders looks for consistency of income. They want to see that business has been ticking along steadily and maintaining a level of income that is suitable to meet their minimum servicing requirements.”

To confirm this, the lender will request the most recent two years’ worth of personal tax returns. If there is a large fluctuation between taxable income for the two financial years, the lender will generally utilise the figures that relate to the lower of the two, even if that is the older statement.

“This can often leave the applicant falling short and failing the banks initial servicing check,” Sukkar confirms. “Not all hope is lost, though. By working closely with your broker and your accountant, you can often unearth pertinent information about your business that can mitigate large deviations.”

For example, a start-up business may have a lot of one-off expenses in the early days, which a lender might take as being ongoing or recurring expenses account. 

Also, if you renew a certain piece of equipment or attend courses or training one financial year, you won’t necessarily have this same expense every year, so future year’s will see this expense show up in net profits. 

“My advice to self-employed applicants is to tell their broker or lender what’s been going on in the business, as a solution may not be obvious to you, but will be to a trained eye,” he says.

Finally, Sukkar says the most common issue for self-employed applicants is that their accountants are too good at reducing their taxable income, which can come back to bite you when it comes to applying for credit. 

“Without adequate taxable income, most lenders will shy away from doing business with you. In this new age of regulation and responsible lending, there is increased pressure on lenders and indeed brokers to confirm an applicant’s ability to meet minimal servicing requirements,” he explains.  

“Ask yourself this – if I am not able to borrow money, how is this going to impact on my ability to make the financial decisions I have planned? Am I saving more by not paying tax, or am I losing more by not being able to invest in a new home or investment property?”

Here are the current home loan rates in the market

Lender

Variable
More details
LIMITED TIME OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
FREE REDRAW FACILITY
  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraw
  • Optional 100% offset can be added for $120 p.a.^
  • Application completely online
FREE REDRAW FACILITY
Variable
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100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NO UPFRONT OR ONGOING FEES
NO UPFRONT OR ONGOING FEES
Variable
More details
NO ONGOING FEES
NO ONGOING FEES
Variable
More details
UNLIMITED EXTRA REPAYMENTS
UNLIMITED EXTRA REPAYMENTS
Variable
More details
Variable
More details
Variable
More details
LIMITED TIME OFFER
  • Fast turnaround times, can meet 30-day settlement
  • No ongoing or monthly fees, add offset for 0.10%
  • Extra repayments + redraw services
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 1yr

  • Fast turnaround times, can meet 30-day settlement
  • No ongoing or monthly fees, add offset for 0.10%
  • Extra repayments + redraw services
Variable
More details
  • Fast turnaround times, can meet 30-day settlement
  • No ongoing or monthly fees, add offset for 0.10%
  • Extra repayments + redraw services
Variable
More details
FREE REDRAW FACILITY
  • Fast turnaround times, can meet 30-day settlement
  • No ongoing or monthly fees, add offset for 0.10%
  • Extra repayments + redraw services
FREE REDRAW FACILITY
Variable
More details
  • Fast turnaround times, can meet 30-day settlement
  • No ongoing or monthly fees, add offset for 0.10%
  • Extra repayments + redraw services
Variable
More details
NO UPFRONT OR ONGOING FEES
NO UPFRONT OR ONGOING FEES
Variable
More details
Variable
More details
NO UPFRONT OR ONGOING FEES
NO UPFRONT OR ONGOING FEES
Variable
More details
Variable
More details
Variable
More details
Variable
More details
100% FULL OFFSET ACCOUNT
  • Reduce the amount of interest you pay by paying more
  • Easily access additional funds in your redraw
  • Fast turnaround times
100% FULL OFFSET ACCOUNT

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 24, 2022.

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