Saving for a deposit and applying for a home loan is tricky at the best of times, let alone when you’re juggling your own business. Self-employed? Here is what you need to know when applying for a home loan.
According to the Australian Bureau of Statistics, it was reported that 7.8% of the employed population in 2021 were self employed or independent contractors. With an abundance of self-employed buyers in the market, there are an increasing number of options for business owners to secure a home loan. There are now many flexible options available for self-employed borrowers, making it just as simple as the traditional process for employees of the public and private sector.
Consider your cash flow
It can be challenging to save for a deposit at the best of times, but if your pay cycles are a little irregular, it can become even harder to keep track of your incomings and outgoings. However, it’s precisely because of these irregularities that self-employed borrowers should be diligent about tracking their cash flow and expenses. Ask yourself, are my expenses fixed? Or do they vary from month to month? If you’re not already keeping a budget, start to think about whether starting one could help you track your expenses. When you have saved up and it comes to crunch-time, it’s important to consider your financial needs and situation and how this will affect how much you should borrow
Don’t rush your decision
Buying your first property can be one of the most important and most expensive decisions you have to make. So make sure you are taking your time when considering a property and aren’t thinking too emotionally. You should do as much research as you can, keep an eye out on realestate.com.au and speak to agents in the area about what you are looking for.
Ask what borrowing options are available
Self employed business owners now have a lot of borrowing options available to them. It’s as simple as getting in touch with a loan manager to ask about the best solutions for your situation. Whether it’s a loan in your personal name, company name, partnership or trust, there are multiple lenders out there that will be able to assist you with financing.
A fast-track loan may even help your family members help you with supporting property equity to reduce your Lenders Mortgage Insurance costs.
Build a solid home loan team
Before applying for a home loan, you should be considering the process and aim to have a team around you. Make sure you plan earlier with your financial advisor, seek the right advice and consider what is right for you. A financial advisor can help you with the preparation of financials to help with funding applications and giving advice on how best to structure the purchase including strategies on how to protect your home.