Can I Still Get a Mortgage If I Change My Business Structure?
A Northern Beaches Mortgage Broker Explains
For many self-employed Australians, changing business structures is part of the natural progression of growth. Whether you’re shifting from a sole trader to a company, partnership, or trust, or even moving from a partnership to a company, you might be wondering:
“Will I still be able to get approved for a mortgage?”
The short answer: Yes, you can.
The long answer? Well, it’s a little more nuanced. While changing your business structure can raise eyebrows with traditional lenders, it doesn’t mean your dreams of homeownership or investing in property are out of reach. You just need to know the right steps, work with the right lender, and ensure you’re set up correctly.
As experienced Northern Beaches mortgage brokers, we’ve helped many business owners navigate this exact situation. Let’s break it down so you can understand how it works and what options are available to you.
Why Do Business Owners Change Structures?
Before we jump into mortgages, let’s quickly look at why business owners change structures. There are plenty of reasons, including:
Tax benefits: A company or trust structure may offer better tax efficiency.
Liability protection: Operating under a company limits your personal liability.
Growth opportunities: A formal structure may make it easier to bring in partners or investors.
Simplifying partnerships: Moving from a sole trader or partnership to a trust can streamline income distribution.
These changes are often a positive step for your business, but they can create short-term hurdles when applying for a mortgage—especially if lenders are confused about your income stability or trading ability.
Can I Still Get a Mortgage After Changing Business Structures?
The good news is that you can still get approved for a mortgage after changing your business structure. However, the process depends on a few key factors:
The New Business Structure Must Be in the Same Industry.
Lenders want to see that you’re still operating in the same industry, even if the structure has changed. For example:
Switching from “John Smith Plumbing Pty Ltd” (company) to “Smith Family Plumbing Trust” (trust) in the same plumbing business raises no major concerns.
If you go from running a retail clothing store as a sole trader to launching a new tech startup under a company structure, lenders will see that as a significant change, which can impact approval.
Why? Because lenders care about consistency. They need to know that your trading ability hasn’t been impacted by the restructure.
Your Trading Ability Must Be Unaffected.
If your income and trading ability remain stable (or grow) after the restructure, most lenders will rely on your historical tax returns to assess your borrowing capacity. For example:
If you’ve changed from a sole trader to a company but are still running the same profitable business, lenders will likely accept your previous tax returns as proof of income.
If the change has negatively impacted your ability to trade—say you’ve gone from five employees to just one—traditional lenders may hesitate to approve your loan.
In short, lenders are looking for evidence that the restructure hasn’t created financial instability.
What If My Income Is Affected By the Change?
If your income has dropped or fluctuated as a result of the restructure, traditional lenders might consider you too high-risk. But don’t worry—there are still solutions.
Here’s where a business-savvy lender comes into play.
Method 1: Accountant’s Declaration
Some lenders will accept a letter from your accountant declaring your income instead of relying on historical tax returns. This is a game-changer for self-employed business owners who’ve recently restructured but have a clear income trajectory.
Here’s how it works:
You and your accountant determine a realistic and comfortable income figure to declare.
Your accountant provides a signed letter confirming this income.
The lender uses this figure to assess your borrowing power.
This method allows you to sidestep the need for traditional documentation, like full tax returns, and makes the process much smoother.
Method 2: Hold Off on Changing Structures
If you’re about to apply for a mortgage, you might consider delaying your business restructure until after your loan has been approved and settled.
Here’s why this works:
Once your mortgage is finalised, lenders can’t stop you from restructuring your business.
You’ll already have secured the loan based on your current income and structure.
The key here is ensuring that the restructure doesn’t impact your ability to repay the mortgage. While it’s a solid workaround, it’s important to plan carefully with your accountant and mortgage broker to avoid any unintended consequences.
Key Things Lenders Look For
To sum up, when applying for a mortgage after changing business structures, lenders typically look for:
Consistency of income: Has your income remained stable despite the restructure?
Trading history: Are you still operating in the same industry or business?
Proof of income: Can you provide tax returns, BAS statements, or an accountant’s letter to verify your earnings?
Business impact: Has the restructure negatively impacted your ability to trade or earn income?
If you can tick these boxes, there’s a strong chance you’ll get approved for a mortgage, even with a recent restructure.
Why You Need a Business-Savvy Mortgage Broker
This is where working with a Northern Beaches mortgage broker like Mortgage Hub can make all the difference. We understand the complexities of self-employed income, business restructures, and the challenges that come with proving income to lenders.
Here’s how we can help:
Finding the right lender: Not all lenders are created equal. We know which lenders are business-friendly and open to accountant declarations or alternative income verification methods.
Maximising your borrowing power: By working with your accountant, we can help you present the strongest case to the lender.
Simplifying the process: Let’s be honest—mortgage applications can be stressful. We’ll guide you through every step to ensure it’s as smooth as possible.
Final Tips for Business Owners
If you’re a business owner considering a restructure and planning to apply for a mortgage, here’s what you should do:
Plan ahead: Speak to your accountant and mortgage broker before making any major changes.
Gather your documents: Keep your tax returns, BAS statements, and profit/loss records up to date.
Be proactive: If income has dropped, consider lenders who accept accountant declarations.
Time it right: If possible, finalise your mortgage before making changes to your business structure.
Let’s Make It Happen
Changing your business structure doesn’t have to derail your mortgage plans. With the right strategy, lender, and advice, you can still achieve your property goals—whether it’s buying a new home or investing in property.
At Mortgage Hub, we specialise in helping self-employed business owners navigate the mortgage process, no matter how complex your situation might seem.
If you’re in the Northern Beaches or beyond, and need tailored advice to secure a mortgage, reach out to us today.
Follow us for more mortgage tips and let’s get your loan approved—no matter what business changes are on the horizon.