If you are self employed, Banks often treat you like you’re unemployed. You’re making a regular income, have a range of stable clients and earn more than employees offering the same service as you. Yet Banks don’t recognise the stability and value you can provide when making mortgage repayments. Instead they simply reject your home loan. If that’s happened to you, you may feel frustrated – and rightly so. But the Banks not approving your home loan application shouldn’t stop you from entering the property market. If you’re self-employed and wanting to take advantage of the projected growth in property prices, you can still get a home loan outside of the Banks.
Why did the bank reject your loan application?
Banks often reject self-employed workers because they haven’t been trading long enough or they are unable to provide sufficient financial information. Banks are great at analysing the macroeconomic environment and setting up rules to treat masses of people that fit their specific requirements. Banks can offer excellent services to the masses. But when it comes to looking at personal situations, especially those of self-employed people, Banks don’t pay attention. As a result, they miss out on providing qualified individuals with healthy deposits and stable incomes with home loans.
How else can you get a loan?
Previously, when self-employed business owners wanted an alternative to the Banks, they would have to get a short-term finance company loan – which charged over 10% interest. Such a high interest rate would make very few property investments worthwhile. Thankfully, there is an alternative.
iLender offers lo doc loans – which are ideal for self-employed people. Lo doc loans – low document loans – are loan agreements that allow you to take out a home loan, or refinance a current home loan, without having lots of financial documents. Responsible lending means you still have to show the ability to pay so bank statements will be needed but not Financial Accounts.
Do you qualify?
It is significantly easier to be approved by iLender when you own your own business, compared to the Banks. Here are a few details to determine if it’s the mortgage solution for you:
- Minimum trading period of 6 months
- Income declared must be within industry norms
- Maximum 80% loan-to-value, subject to property type and location
The opportunities a lo doc loan brings
Getting the home loan that fits your unique situation allows you to enter the property market. The New Zealand market is currently booming. In particular, Wellington, Hamilton and Tauranga are areas that are set for growth in the coming few years. With the high growth expected in New Zealand’s property market, there are substantial capital gains to be made for people willing to enter the market now.
iLender is committed to setting people up with the right mortgage for them. If a loan doesn’t fit your circumstance, we have plenty of other options available. We offer mortgages with lower deposits required than Banks, interest only mortgage loans and first home mortgages. At 80% loan to value you can still get into the rental market without proving your own income by way of Financial Accounts.