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Astute East Brisbane's Finance Insights

Drawing on his industry experience, Tony Duncan shares his thoughts on industry changes, home loan requirements and a number of important areas to consider when planning your first home purchase or your next property investment. 

  • Writer's pictureSteve Dart

Unlocking Home Ownership for the Self-Employed: A Mortgage Broker's Perspective

As a mortgage broker, I've seen firsthand the unique challenges that self-employed individuals face when trying to secure a home loan. While being your own boss comes with many perks, it can sometimes complicate the mortgage application process. Here, we share a success story that highlights how the right approach can make all the difference for self-employed homebuyers.


The Self-Employed Struggle: Ray and Donna's Story


Meet Ray and Donna, company directors of a long-standing family transport business. Despite their successful enterprise, they found themselves repeatedly knocked back by their existing bank when trying to purchase a new home. This is a common scenario I encounter with self-employed clients, but it doesn't have to be the end of the road.


Identifying the Roadblocks


After investigating their situation, we pinpointed several issues that were hindering Ray and Donna's loan approval:


1. Their bank had full access to all historic and current transactions, leading to intense scrutiny.

2. Both company and personal expenses were under the microscope.

3. Company liabilities were being factored into the directors' ongoing expenses, significantly reducing their apparent income available for home loan lending.


A Fresh Approach: Simplifying Income Assessment


The key to helping Ray and Donna lay in finding a lender with a more straightforward approach to assessing self-employed income. Here's how we turned things around:


1. We focused on simple verification through consistent wages paid to the directors.

2. We found a lender who excluded company commitments from the assessment, recognising that the directors' wages were drawn directly from profit.

3. This approach allowed us to demonstrate sufficient borrowing capacity for loan repayments and personal living expenses.


The Result: A Successful Outcome


By identifying the problems and recommending an alternative bank with a simplified assessment process for business owners, we were able to secure funding for Ray and Donna's new home. As an added bonus, we also uncovered opportunities to streamline their day-to-day banking.


Lessons for Self-Employed Homebuyers


If you're self-employed and dreaming of homeownership, remember:


1. Not all lenders assess self-employed income the same way. Shop around!

2. Consider working with a mortgage broker who understands the nuances of self-employed finances.

3. Be prepared to demonstrate a consistent income stream

4. Don't let initial rejections discourage you. There are often alternative solutions available.


At the end of the day, being self-employed shouldn't stand in the way of your homeownership goals. With the right guidance and a lender who understands your unique situation, you can turn your property dreams into reality.


Have you faced challenges securing a mortgage as a self-employed individual? I'd love to hear your experience and see if we can help. Complete the contact form below and let’s get connected.





 

Disclaimer:


Astute Financial Management Pty Ltd | ACN 093 587 010 | Australian Credit Licence 364253 | Davgan Insurance & Wealth Pty. Ltd. T/As Astute East Brisbane Corporate Authorised Representative (425641) of Alliance Wealth Pty Ltd | ABN 93 161 647 007 | AFSL 449221. www.centrepointalliance.com.au/aw | General Insurance provided by Astute Insurance Pty Ltd | ABN 59 622 582 236 | Authorised Representative of Ausure Pty Ltd ABN 94 096 971 854 AFSL 238433. Health Insurance products are underwritten by St Luke’s Medical and Hospital Benefits Association ACN 009 479 618 (St.LukesHealth), a registered private health insurer, [trading as Astute Simplicity Health] and members are introduced by Astute Financial Management Pty Ltd or related entities (collectively known as Astute) for which Astute receives a commission.


General Advice Warning: 


This communication contains general information only and in no way constitutes the provision of professional advice, nor should it be relied on as a substitute for financial, credit, accounting, legal or other professional advice. We have not taken into account your financial situation, investment objectives or particular needs. Before making an investment or financial decision, a person must seek appropriate independent professional advice and also consider whether this information is appropriate to their needs, objectives and circumstances. The author as well as their representatives, agents and employees give no guarantees and make no representations, express or implied, as to the accuracy, currency, completeness or suitability of the information contained in this document. Nor do they accept any liability whatsoever as a result of any information herein being incorrect, incomplete or unsuitable or as a result of a person in any way using or relying on the information herein.

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