High loan
approval rates

100% client
satisfaction

Home Loan
Policy Experts

We help business owners get approved

Each year, many Australians choose to leave their full-time jobs and apply their skills and knowledge to run their own businesses. However, a major hurdle they face is that traditional banks often don’t fully grasp the financial dynamics of self-employed individuals. With incomes that may fluctuate and a lack of regular payslips to demonstrate financial stability, obtaining a home loan can be a challenge for business owners.

At Zenith, we specialise in helping business owners and self-employed borrowers navigate the complex world of mortgages. We understand the unique challenges that come with being self-employed, and we’re here to help you secure the right loan with minimal stress. Whether you’re a business owner, freelancer, or contractor, we guide you through every step of the home loan process, from gathering documentation to comparing lenders, ensuring you get the best deal for your specific situation.

Self-employed

Self-Employed

Self-employed refers to someone who works for themselves rather than being employed by a company or an individual. They typically run their own business, work as an independent contractor or as a freelancer. Usually, income from self-employment doesn’t follow a set schedule or pattern and can fluctuate from month to month, and as a result lenders tend to put importance on longevity and consistency of income across multiple years.

How to Qualify for a Home Loan as a Business Owner

Generally, most lenders’ credit assessors are unfamiliar with how to properly assess self-employed loan applications, especially those in a more complex structure such as borrowing in a trust. This is one of the reasons why it is important to work with a mortgage broker to present your case in a clear and concise manner, to make it easy for the credit assessor to understand, and ultimately approve your loan application with minimal fuss.

To qualify for a full-doc home loan from the best banks, these are the minimum required documents that you’ll need to show:

  • Tax returns for the past two years, along with the corresponding Notices of Assessment (NOA).
  • An Australian Business Number (ABN) showing at least two years of trading activity.

Challenges of Getting a Home Loan for Business Owners

Applying for a self-employed home loan in Australia can be more challenging than for traditional employees due to a number of factors. Here are some common ones:

  • Inconsistent Income: Many self-employed individuals experience fluctuating income, making it harder for lenders to predict your long-term financial stability.

  • More Documentation: Self-employed applicants need to provide more documentation, such as tax returns, financial reports, BAS’s, and bank statements, to prove their income and financial position. This process can be time-consuming and complex.

  • Recently Transitioned to a Company Structure: Many employees, sole traders, and contractors naturally transition to a more tax beneficial company structure as their business grows and evolves. As a result, there’s often minimal trading history to show.

  • Time-Poor: Many business owners are involved in the day-to-day operations of the business and just simply do not have time to manage the loan process themselves.

  • Limited Trading History: Most lenders require self-employed applicants to show at least 2 years of consistent trading, making it harder for those who are newly self-employed.

Given these challenges, working with a specialist mortgage broker can significantly simplify the process. Brokers can help you navigate these complexities, ensure your application is as strong as possible, and connect you with lenders who understand how to assess self-employed borrowers.

How Do Lenders Assess Self-Employed Income

Lenders look at your past tax returns to see how stable your business has been and to predict your future stability during the loan term. They are more cautious if your income has decreased in the past two years.

Here’s how some lenders typically evaluate your income:

  • Use the average of the last two financial years for borrowing capacity
  • Use the most recent financial year for borrowing capacity
  • Use the lower of the last two financial years for borrowing capacity
  • Use 120% of the lower of the two financial years for borrowing capacity
  • Add back depreciation to your borrowing capacity
  • Analyse your most recent business activity statements (BAS)
  • Review your last six months salary credits paid by your business
  • Accept an accountant’s letter and perform a verification call

As you can see different lenders have different methods of assessing your self-employed income. Your experience in your industry, your risk profile, and your financials all affect your home loan application. 

Documents To Provide for The Best Chance of Approval

Lenders will request documentation to verify your financial status, including your income. For sole traders, freelancers, and business owners, this might include:

  • Company tax returns
  • Company financial reports (Income Statement & Balance Sheet)
  • Individual tax returns
  • Notice of Assessment from the ATO (found in MyGov)

If you’re unable to provide these documents (for instance, if your tax returns are not yet finalised), lenders might accept the following alternatives:

  • Accountants letter
  • Business activity statements
  • Business banking statements
Get a home loan with full guidance and expert assistance

Schedule a consultation with one of our home loan experts

If you are newly self-employed, your options are more limited because you won’t have the required documentation (i.e., tax returns) to prove your income. Self-employed applicants are generally considered higher risk due to income fluctuations and uncertainties, and this is especially the case when you are first starting your business. However, there are still instances where lenders can accept your income. Some lenders may consider your previous employment income, particularly if your projected earnings from the business align with your previous salary. For those who have been in the same industry for a while before starting their business, it may be possible to get approved if you can provide 12 months of financial statements. It is important to work with a broker who can put your application in the best light by highlighting your strengths and industry experience. We have lenders on our panel who will take a commonsense approach where they will consider your application based on relevant industry experience. 

Yes, how lenders assess your income and expenses can directly impact whether your loan is approved or declined, as well as how much you can borrow. By correctly presenting your income and managing add-backs, you can improve your chances of approval. For instance:

  • Add-backs: Adding back one-off business expenses or depreciation can make your financials stronger, increasing your borrowing capacity and improving the chances of loan approval.
  • Business Health: Lenders will assess the health of your business, including profit and loss statements, tax returns, and overall cash flow. A stable, profitable business is key to a successful application.
  • Expense Management: Understanding how expenses, including personal vs. business expenses, are treated can make a significant difference in your ability to borrow.

Many self-employed borrowers overlook the opportunity to increase their borrowing capacity by accounting for add-backs. Add-backs are non-cash expenses that do not affect your actual income but reduce your taxable income, such as:

  • Depreciation on business assets
  • Non-recurring business expenses (e.g., one-off legal fees, repairs, or other large costs)
  • Interest on business loans that may not need to be factored into your personal expenses

By knowing which expenses can be added back to your income, you can boost your borrowing power and improve your chances of approval. Each lender has different add-back rules, so it’s crucial to understand these nuances to maximise your borrowing potential.

Sometimes you may not be in a position to supply all the documentation that the lender requires. For example, you may be behind in finalising your taxes with your accountant and therefore do not have up-to-date tax returns available. 

In these instances, you may need to consider a low-doc home loan. Low-doc home loans are designed for self-employed borrowers who may not have the standard documentation like company financials or tax returns. These loans offer a flexible solution for securing a mortgage when traditional income proof isn’t available, but they often come with higher interest rates and stricter requirements.

A skilled mortgage broker can help you navigate the complex assessment process by:

  • Advising on the best documentation: We know what lenders want to see and can help you prepare your application for the best chance of success.
  • Maximising add-backs: We can identify expenses that may be eligible for add-back and help you present these to the lender to improve your borrowing capacity.
  • Finding the right lender: Each lender has different policies around assessing self-employed applicants. We can match you with the best lender that aligns with your financial situation and needs.
  • Explaining lender policies: We help you understand each lender’s specific criteria for things like add-backs, depreciation, and other expenses that can affect your application.

Our Lenders

pepermoney

Where
experience
counts

Having encountered thousands of different scenarios, our team is well equipped to find you suitable solutions. Having the right mortgage broker by your side is essential to ensure you are getting the absolute best deal for your unique situation.

client satisfaction
0 %
loans approved
0 +
different lenders
0 +

Join thousands of satisfied customers

Have an obligation-free chat
with one of our experts

Success

Your success 
is our success

We understand everyone’s circumstances are different and we take the time to understand you and your goals. We value forming lifelong relationships with all our clients and we are fully committed to adding value every step of the way.
 
We know that mortgages can sometimes be complex and hard to understand. We focus on simplifying the process for you and we treat your loan as if it were our very own. Let us do what we do best so there’s one less thing for you to worry about.

Frequently Asked Questions

Partnering with a mortgage broker like Zenith can significantly streamline your home loan journey. We provide expert advice on loan products carefully tailored to your unique financial situation. By handling the legwork, comparing multiple options, managing paperwork, and negotiating better terms, we save you valuable time and help identify potential hidden fees. As we are not tied to any single lender, we can select the best loan for your needs, ensuring you secure the most suitable deal. Additionally, we proactively review your interest rate multiple times per year to ensure you remain on the most competitive rate available, maximising your savings and giving you long-term peace of mind.

Our services are provided at no cost to you. We receive compensation directly from the lender you choose once your loan is settled, ensuring that you can explore your options without incurring any upfront fees.

Each lender has unique criteria and requirements that must be met before they approve a loan. Our team takes the time to thoroughly analyse your credit history, income situation, and the specific strengths and weaknesses of your financial circumstances. This allows us to match you with the most suitable lender and loan package tailored to your needs. Our experienced professionals will provide you with comprehensive information, ensuring you have everything necessary to make an informed decision.

To begin, we’ll work closely with you to understand your goals and objectives. We’ll then gather and review all necessary supporting documents to ensure we have a comprehensive understanding of your situation. Once we have sufficient information to make a personalised recommendation, the next step will depend on the chosen lender’s processing timeline. This can vary from several weeks to a few months, which is why we strongly advise initiating the process as early as possible, especially when it comes to property purchases, where timing can be crucial.

You may not always qualify for financing from a specific bank. After assessing your unique situation, we’ll work to find you the lowest possible interest rate from eligible lenders. While interest rates are important, they’re just one piece of the puzzle. We’ll also help you consider all other fees and features associated with each loan option, ensuring you have a complete understanding of your choices and can make an informed decision that best suits your needs.

Typically, lenders require a minimum deposit of 5% of the property’s purchase price to secure a home loan. However, in some cases, it may be possible to proceed with a lower deposit. Keep in mind that if your deposit is less than 20% of the property’s price, you may need to pay Lenders Mortgage Insurance (LMI), unless you qualify for an LMI waiver. To explore your options and determine the best approach for your situation.

Support for Self-Employed Borrowers

See what we can achieve together