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Home Loans for Self-Employed Australians: Your Guide to Securing a Mortgage

Securing a home loan can be challenging for anyone, but self-employed customers often face unique obstacles. Unlike traditional salaried employees, the income of self-employed individuals can fluctuate, making it harder to demonstrate consistent earnings. Instead of pay slips, self-employed customers may need to submit various financial documents, such as tax returns and business financial statements, which can be time-consuming to compile. At Brighten, we understand these challenges and offer flexible solutions tailored to your needs. Here’s what you need to know to qualify for a home loan as a self-employed borrower in Australia.

Home Loans for Self-Employed

Understanding income documentation requirements is essential, as they largely determine the type of home loan you may qualify for, which will likely impact the cost of your loan. In general, self-employed individuals may consider two types of home loans:

Full Documentation (Full Doc) Loans:

These loans are typically priced more competitively but require traditional proof of income, meaning comprehensive financial documentation, including multiple years of tax returns and financial statements.

  • Most lenders require the most recent two years of financials.
  • Some lenders, particularly non-bank lenders, may accept one year of financial statements.
  • If you are a company director earning consistent salary wages, some lenders may also accept pay slips to verify your income as part of the assessment.

Alternative Documentation (Alt Doc) Loans:

These loans are designed for those who may not have traditional documentation, allowing for alternative forms of income verification.

  • Banks in Australia do not offer Alt Doc loans.
  • Non-bank lenders generally accept alternative income documents such as Accountant’s letters, Business Activity Statements (BAS), or business bank statements.

It is important to remember that different lenders have varying income verification requirements, so selecting the right lender is crucial. At Brighten, we offer both Full Doc and Alt Doc solutions to self-employed customers and accept all the income documentation options mentioned above.

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Tips for a smooth application process

To increase your chances of securing a home loan, consider the following tips:

Maintain Accurate Financial Records:

Keeping your financial records up-to-date and accurate can make the application process smoother and faster.

Separate Personal and Business Finances:

Ensuring a clear distinction between personal and business finances can help lenders assess your application more effectively.

Consult a Mortgage Broker:

A broker specializing in self-employed home loans can provide valuable insights and connect you with lenders that understand your unique situation.

Increase Your Savings:

A larger deposit can improve your loan approval chances by reducing the lender’s risk.

Reduce Debt:

Paying down existing debts can improve your credit score and show lenders that you manage your finances responsibly.

How much can I borrow as a self-employed?

The maximum amount you can borrow for a home loan depends on various factors such as your income, liabilities, credit history, and the loan-to-value ratio (LVR)

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Conclusion

Securing a home loan as a self-employed borrower doesn’t have to be daunting. With the right preparation and guidance, you can navigate the process successfully. Brighten is committed to helping you achieve your homeownership dreams, offering flexible solutions and expert support tailored to your unique needs. Contact us today to learn more about how we can assist you in securing a home loan.

FAQ about Brighten’s Self-employed Home Loans

Does Brighten accept 1-year financials or Director’s Wages?

Yes, Brighten accepts one-year financials or director’s wages as part of income verification under a Full Doc Loan.

Does Brighten offer Alt Doc loans?

Yes, Brighten provides Alt Doc loans tailored for self-employed individuals. We accept alternative income verification documents such as Accountant’s letters, Business Activity Statements (BAS), and business bank statements.

Can self-employed expats use foreign income to apply for a home loan?

Yes, self-employed Australian citizens and permanent residents living overseas, as well as new migrants in Australia, can apply using foreign currency income. Brighten accepts over 20 income currencies, including AUD, NZD, CNY, HKD, SGD, GBP, USD, and VND.

Does Brighten offer cash out and debt consolidations?

Yes, Brighten offers:

  • Prime loans: Unlimited cash-out; up to five unsecured debts (excluding ATO debts).
  • Near Prime loans: Unlimited cash-out; unlimited number of debts, including ATO debts.

What types of security are acceptable?

Brighten accepts houses, townhouses, and apartment units larger than 50 sqm as security. Under our Prime product, we accept properties in category 1 and 2 locations, and in category 3 locations under our Near Prime product.

Do you offer interest only loans?

Yes, Brighten offers interest-only loans for up to five years, after which the loan reverts to principal and interest repayments for the remaining term.

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