Obtaining a home loan requires that you submit certain documents to the lender, but these papers are not always available to the self-employed. This will not mean that you can’t secure a home loan. It only means that the process will be a little bit different for you.

First Determine Eligibility

The first thing to do is to determine the taxable income level you need to qualify for the loan. Then, the lender will want to know that you can actually afford to repay the money you are being issued. If you can show that your income is stable, this will serve you well during the loan process. In order to do this, you must present your personal tax returns for the past two years. If the lender approves, you will move on to the next step.

The Low Doc Home Loan

You have options available to you that were geared specifically toward the needs of the self-employed applicant. These are called “low doc home loans.” With these loans, you can borrow between 60 and 80 percent of the purchase price without being required to pay mortgage insurance. Your lender may even reduce the amount of fees you must pay for your loan.

Requirements for the Low Doc Loan

To qualify for a low doc loan, you may need to present the following to your lender:

• ABN or Certificate of Incorporation
• Business activity statements
• Statements from your personal account or primary business account

In order to receive approval for a home loan, some lenders require that applicants work in the same industry for the past year or two. Also, the Australian Tax Office will need to verify your business activity statements before the lender will consider them. Lastly, you are required to present confirmation that at least 12 months worth of your income is registered for GST.

Applicants for the low doc home loan also need to undergo a credit check. There is no need for concern because the bank will not necessarily make it more difficult for you to pass the credit check just because you are self-employed and applying for a low doc home loan.

An Important Tip

The best place for a low doc home loan is not necessarily the bank where you hold your savings accounts. A good plan is to ask several financial institutions what their terms and conditions are before deciding on a lender. Then, you can be assured that you are receiving the best deal possible.

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