Self-employed home loans

Q. I own a small business that has operated for five years. My family and I are currently renting a property but we are keen to own our own house. However, a relative of mine, who is also self-employed, said he was rejected for a home loan as he was not able to provide a completed tax return. Do I need to provide tax returns when I apply for a home loan?

A. Applying for a home loan as a self-employed person can seem more complex at times. The reason for this is that self-employed people are considered a higher risk to lenders compared to employed people.  Tax returns are just one example of how you can verify your income. However, there are alternative ways to show that you can afford a home loan.

One example is your business’ Business Activity Statement (BAS). The BAS shows the turnover of a business’ profit. As this statement is usually filled out either monthly or quarterly, it is considered an applicable source of verification as it reflects the current status of your business’ financial situation.
Another way you can verify your income is to have your accountant speak with the lender so they can confirm the state of your business’ financials.

It is important to note that tax returns are considered the most common and traditional form of verification. Therefore, if you verify your income in an alternative way, some lenders may charge a higher interest rate. State Custodians offers a range of specialised loans for self-employed people, if you would like to learn more about these specialised loans, please click here.