• Top 3 home loan tips for business owners

    Applying for a home loan might seem difficult for some business owners, but it helps if you’re prepared with the all the information your lender needs.

  • As a business owner, you probably love the freedom and flexibility that comes from being self-employed. What you may not love is the extra effort you need to put into getting a home loan. 

    The main reason for this is that lenders are trying to understand your financial position. With business and personal finances to consider, there’s more information they need to see – which may slow down applications if you don’t have that information readily available.

    Here are some tips to make your make your path through the home loan process as smooth as possible. 

    1.     Get your tax returns up-to-date

    You may experience fluctuations in income and expenses, which could add complexity when lenders are trying to assess your borrowing capacity.

    To get a better understanding of your financial position, most lenders want to see:   

    • 2 years of Personal Income Tax Returns 
    • 2 years of Business Income Tax Returns
    • 12 months of Business Activity Statements (BAS)    

    Having your tax returns up-to-date will help speed up the loan application process , so talk to your accountant about getting yours in order before you apply for a home loan. 

    If you don’t have full financials, some lenders may allow you to provide a Borrower Certificate of Income Declaration signed by your accountant as an alternative way to verify your income.

    If you’ve been in business less than two years it can be more difficult to get a home loan, but talk to a RAMS Home Loan Specialist who can assess your situation and provide guidance.

    2.     Smarten up your cash flow 

    Lenders will look at your personal and business cash flow to ensure you’ll be able to keep up with your regular home loan repayments. 

    • To present your cashflow in the best possible light:  
    • Chase up as many outstanding payments as you can
    • Review your expenses. Figure out where you can reduce your costs. 
    • Look at your current debt and see if you can combine it in a low interest and low fee product so you’re paying less interest.  

    3.     Check your credit file history      

    Run a credit file report on your personal and business credit file history. If there have been issues in the past, it’s a good idea to check your credit file and try and rectify the situation prior to applying for a home loan, such as paying any overdue accounts.  

    Sometimes your credit file may have errors such as defaults, court writs or judgments listed by mistake. You should contact the credit provider or agency who listed the error to rectify any issues.

    Want to learn more?

    Check out our Self-employed page and get in touch with your local RAMS Home Loan Specialist. They can help you be as prepared as possible so you can move quickly when you find your dream home.

    More information:

    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. 

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  • Disclaimer:

    While such material is published with permission, RAMS is not responsible for its accuracy or completeness.  This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information to your own circumstances and, if necessary, seek appropriate professional advice.