It's hard enough for the average hard working employed Australian to get a home loan so is it at all possible if you just don't fit the normal grade in the banks' lending criteria? Let me share my thoughts that, yes, it can be possible...with a cunning plan...
Taking a look at the common and not so common methods of gaining finance to purchase your home property can be a daunting affair. There are literally hundreds of different products and opportunities out there and it is difficult to know which way to turn. But if you are diligent enough to keep on top of the changing lenders' criteria, you may just well come out on top!
The major trouble with being self employed is that the banks view you as a potential bankrupt - and with businesses increasingly falling upon hard times in today's climate, it's not really a surprise that they are clamping down even tighter than before.
So is there any chance that you can convince them otherwise?
Well, to even get your foot on the first rung of the process, you really need to have at least two years' worth of financial records for every entity along with an Australian Business Number (ABN) for at least two years also.
So first of all, make sure you keep every single piece of financial information for each and every business entity you have; that is absolutely crucial.
I'm sure you've heard the advice to pay yourself first in your business and then pay everything and everybody else.
However, self employment obviously carries the responsibility of replacing and repairing any tools that you may need to run your business so this too will be taken into consideration and a relative amount will be deducted from your income.
So, if you're thinking now 'Great, I'm sure the bank will be happy', you may need to take a seat!
Although it all sounds good and dandy so far, the reality is that lenders will average the income across the two year period if the most recent year is better than the last. They also want to take a look at how regular your income is; a variance of 20% or more across the year will likely send your application into the rejected file quicker than a mouse up a drain pipe.
And that is a real frustration to the self employed whose income fluctuates with the seasons - if you can show that your down months are supplemented by your high income months, you may just find an understanding bank to fish it back out the 'no' pile and re-address the matter.
It really doesn't help the small business owner who was just getting his act together in the first year and is doing really well now either.
If you're in this situation and are really struggling to find an empathetic lender, why not consider a Wrap where you can get yourself into a great property with vendor financing? As soon as you have the right credentials for the banks, you can happily swap your vendor financing over to the bank lending process.
Paul Zalitis is a positive cash flow property investing expert and coach, who regularly contributes articles, ebooks and coaching through webinars designed for the First Time home wrapper. His latest Book, "Opportunity Housing Complete Guide" is available at: http://www.aussiewrapper.com or watch his latest three F.R.E.E videos at http://www.aussiewrapper.com.au. Look out for his new guide - Australian Wrap Report - coming soon!
Is There A Way To Get A Home Loan If You're Self Employed?