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  • Home loans for the self employed 101

    Home loans for the self employed 101

    Getting a home loan when you’re self-employed can be tricky, especially with all the documentation that’s required, like tax return statements and payment summaries. Thankfully, some finance providers have come to the table by offering a home loan that may help you to reach your property dreams faster.

    Here’s a quick breakdown of home loans for the self-employed:  

    What is a self employed home loan?

    When you’re busy running your business, staff and everything in between, organising paperwork can be a massive hassle. However, a self employed home loan allows for the provision of documentation to suite a small business’ unique needs such as your business activity statement, income declaration and registration for GST.

    How much deposit will I need?

    Most lenders will require you to have a significant deposit and may even ask you to pay lenders mortgage insurance if you’re borrowing more than 60% of the property value. Keep in mind, lenders mortgage insurance doesn’t protect you the borrower, instead it protects the lender in the case you forfeit on your home loan.

    Generally, you will need to have saved a minimum of 20% of the property value. For example, if you’re borrowing $500,000 for a two-bedroom apartment in Sydney, you’ll need to have saved up a considerable $100,000.  Financial lenders will also usually take any equity from a current property you own into consideration.

    While the deposit can be one of the biggest expenses when it comes to buying a property, there are plenty of other costs that should be factored in, such as stamp duty, home loan application fees, ongoing fees and repayments and council rates etc.

    Are there any catches?

    The short answer is yes and it comes in the form of a higher interest rate attached to your home loan. So make sure you take a good look at your financial situation to determine whether you can service the home loan and all the other costs with owning a property. Use RAMS’ home loan repayments calculator to help you decide how much you can afford to borrow.

    It’s also important to remember that interest rates are at record lows at the moments, but you should plan ahead in the case of a rate hike in the future.

    Want to know more about self-employed home loans - view our self-employed home loans page.

    Information in this material is general in nature and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you.  You should also obtain independent professional advice relevant to your financial circumstances.

    The taxation position described is a general statement and should only be used as a guide.  It does not constitute tax advice and is based on current tax laws and their interpretation. 

      

     

    About the author

    • Raymond

      Raymond A Ram is the RAMbassador for RAMS Financial Group. Raymond works with the RAMS team to bring simple, helpful and expert information on home loans and savings accounts to life with his down to earth and cheeky personality. He enjoys seeing everyday Australians turn their dreams of saving for a goal or getting into a home a reality. 

      Growing up in Goulburn, NSW, Raymond was brought up with good old-fashioned Aussie values of hard work and a fair go. It soon became apparent that Raymond wasn't content for the conventional path of grazing, producing the very best wool, and finding a nice sheep to settle down with. So it wasn't long before his passion for performing and his talent as a likeable larrikin shone through - landing him a few roles such as 'RAMlet'. He was even tipped to play RAM-bo at one point but chose to become star of the small screen instead as RAMbassador for RAMS. He now finds this role so much more rewarding.

      Contact your local RAMS Home Loan Centre about your home loan options.

      Raymond A Ram
     

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  • Disclaimer:

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.