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Whilst being self employed may provide greater flexibility in tax and income it often means that more planning is needed to obtain finance.

If you have up-to-date financials that show good income

For self employed people who have up to date tax returns and financials that show the necessary level of income then the borrowing process is much the same as for anyone else. The only difference is that you will generally be asked to provide not only your 2 most recent personal returns but the 2 most recent years financials for any entities involved with the generation of that income eg. Companies, Family Trusts, etc

If you have up-to-date financials but don’t show much income

Before assuming you are not eligible for a standard home loan we recommend that you talk to a Creative Finance consultant about your situation. Whilst you may only show a low income lenders will ‘add back’ or allow for many items. For example:

• Depreciation
• Do you run your motor vehicle through the business
• Are their retained profits in the business
• Are their loans to the business from yourself that can be paid back tax free

If you do not have up-to-date financial or cannot show your true level of income

If you do not have up to date financials and it is not timely for you to get them up to date then you will have to consider a Low Doc loan.

If you do have up to date financials but cannot show your true level of income then you may consider a Low Doc loan but you need to ensure that you do not place yourself in undue financial difficulty.

I have enough Income but cannot show it

If you are in a business which generates significant amounts of cash that you choose not to declare but are comfortable that you can service a loan then you can consider a Low Documentation loan as the only requirement in many cases is that you declare that you are able to service the loan without undue financial hardship

However it is extremely important that you understand that the Australian Taxation Office may request information off your lender. If your declared income and the repayments you have been making are at a mis-match to what you have declared to the Australian Taxation Office then you may be audited and face greater consequences!!