I’m self-employed, can I get a home loan?

3 MIN READ December 19, 2022
Whether you’re running your own business, working as a contractor, or building up your reputation as a freelancer, being self-employed comes with some great perks but also some stressful responsibilities. A question that’s often asked when it comes to being self-employed is whether or not…

You’ll need to prove your income

This part is the same as if you were applying for a home loan with a full-time PAYE job – the bank or lender still needs to know how much you earn.

Most banks or lenders will need the last two years of financial records, and will also likely require:

  • The current financial position of your business – i.e. your balance sheet
  • The profit and loss or income statements that demonstrate the financial performance of your business over a certain period of time
  • A record of the money coming in and going out of your business that shows patterns of income and expenses – i.e. your cash flow statement

You’ll likely also need to produce bank statements, a declaration from your accountant, evidence of savings for your home loan deposit, and a good credit history.


You’ll need to provide information about your business and your experience

When you’re trying to win over a client, or participate in a networking event, you’re going to get asked what your business does, and what experience you have. This is partly because the person wants to know if you’re right for the job, but they also want to know that you’re legitimate and that you know what you’re doing.

The same goes for the banks and lenders. They’ll want to know more about exactly what you do in your business, and how much experience you have in your field. This will help them to determine how stable your business is and the kind of future it’s likely to have. Having this kind of information handy will help you in your endeavour to get a home loan.


Any financial inconsistencies will need to be explained

Even if your income has been low but steady, this can sometimes be more favourable to a lender than extreme highs and extreme lows. If you’ve had any major expenses or there have been some dramatic changes in your sales figures, you’ll need to have an explanation at the ready.

Knowing that your income might fluctuate is part of why banks and lenders have to be so critical with self-employed and contractor income – at any point, you may not be able to pay back your loan. The more careful and consistent you can keep your business finances, the better.


Seeking help from the professionals is key

When you’re self-employed and looking to apply for a mortgage, it’s best to get the professionals involved. This includes an accountant and a mortgage broker.

Your accountant can prepare your financials in a way that makes sense to the lender and clearly shows your financial position. They can even prepare cash flow forecasts to show likely income and expenses in future.

A mortgage broker can help explain exactly what is needed and work with you to get everything in order to give a well-presented picture of you to the bank or lender.


Self-employed and need help getting your home loan sorted? Come and chat with us. Our team of expert financial advisers can get you on your way to owning a brand new home.

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