Problems with interest rates and repayments? Ask for home loan help.
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Self-employed people can find it hard to get approval for a traditional home loan. This is because self-employed workers benefit from tax offsets surrounding income and expenses which make it difficult to show the banks exactly what their income really is.
However, the current mortgage market does cater for this growing group of consumers and offers a variety of ways to get finance for a property.
Despite the fact that many self-employed workers are very profitable and have secure work, lenders get nervous. Banks like regular income, proven savings and financial records dating back at least two years - everything a normal PAYG worker would usually have. If you are self employed, making every effort to ensure your personal documentation such as tax returns and bank statements are up to date should be a priority. If you have proof of income, a savings history and a tax return for the previous two years, then applying for a home loan should be no different to a normal PAYG employee.
If you can not provide this paperwork to the lender, you will probably have to accept you won't get a traditional home loan, and look at applying for a low-doc or no-doc home loan. A low-doc loan still requires some evidence of income such as back statements or tax returns etc. A no-doc home loan works by self certification, and requires no documentation. A statement signed by you declaring your income is accepted by the lender. Borrowers applying for a low-doc or no-doc home loan will need to have a clean credit history and proof of identity.
Low-doc and no-doc home loans offer a reasonable and fair home loan alternative for people who for whatever reason cannot disclose their income in full, such as self-employed workers. However, higher interest rates are usually applied to these loans, depending on the perceived level of risk by your lender. Lenders Mortgage Insurance and higher interest rates can quickly add up so it is important to do your research before committing to any loan. There may be other fees involved for a low-doc loan, although the more documentation you can provide, the less these will be.
Talk to a qualified mortgage broker in your area to find out more.
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