Self-Employed? 3 Things That Could Impact Your Home Loan!
- Aron Cardona
- Apr 2
- 2 min read
Applying for a home loan as a self-employed borrower comes with a few extra challenges compared to a standard PAYG applicant. Lenders take a closer look at your income, tax returns, and business financials to assess your ability to repay the loan.
As an experienced mortgage broker in Northern Beaches, I’ve helped many self-employed clients secure home loans despite the extra hurdles. Here are three key factors that could impact your application and how to navigate them.
1. Your 2023 Tax Returns Are Now Outdated
Lenders typically require your two most recent years of tax returns to assess your income. Since we’ve just hit the cutoff for 2023 tax returns, you’ll now need to complete your 2024 tax returns before they can be used in a new application. If your latest returns aren’t available yet, this could delay your loan approval.
What You Can Do:
Get your 2024 tax returns prepared and lodged as soon as possible.
Speak with your accountant about structuring your income to improve your borrowing power.
Work with a mortgage broker who understands self-employed lending policies.
2. Retained Profits Don’t Count as Income
Many business owners assume that the money retained in their company from previous financial years will count toward their borrowing capacity. Unfortunately, lenders don’t include retained profits as part of your assessable income unless they are paid out as wages or dividends.
What You Can Do:
Consider withdrawing profits as salary or dividends if it aligns with your tax strategy.
Work with a lender that takes a holistic view of your financials.
Provide additional supporting documents, such as business bank statements, to demonstrate cash flow.
3. Business Debts Can Affect Your Borrowing Power
Even if you’re applying for a home loan in your personal name, your business debts still impact your application. Lenders will look at any outstanding business loans, overdrafts, or credit cards and factor these into your personal liabilities. This can reduce how much you’re eligible to borrow.
What You Can Do:
Reduce business debt where possible before applying for a home loan.
Ensure all business debts are properly structured and accounted for.
Work with a mortgage broker who specializes in self-employed lending to find the best lender for your situation.
Need Help Navigating Your Home Loan?
Securing a mortgage when you’re self-employed doesn’t have to be overwhelming. Working with a mortgage broker in Northern Beaches who understands the complexities of self-employed lending can make all the difference.
If you need tailored advice or want to explore the best loan options for your situation, get in touch today! Let’s make your dream home a reality without the stress.