If you are Self-employed, it can be more difficult to get a mortgage than you would think.
On the one hand you have the freedom to build your business, but it is not always so easy to navigate the requirements the Bank has in place for people who are self-employed.
To help you understand just what you need to consider we’ll start by saying there is some good news!
More and more Banks and other Lenders are starting to understand how self-employed income works. Therefore, with the right advice and preparation, you can aim to more easily achieve your property finance goals, albeit for a purchase or refinance.
Key is How You Present Your Finances
Banks and other Lenders will want to see that you can manage your income and meet your regular repayments.
So to provide this information most Bank and other Lenders will want to see your last two years of financial statements, ideally prepared by a qualified Accountant. This helps them see your income trends, your ability to manage expenses, and your therefore your overall financial position.
If you have been self-employed for less than two years, there’s no need to stress as there are still options.
Some Lenders offer alternative documentation loans, or can assess your application using:
- Cashflow forecasts
- Evidence of ongoing work or
- An Accountants letter confirming the ability to pay
- Evidence of industry experience prior to starting your business.
How to Improve Your Chances
Being self-employed, your mortgage application may need a bit of fine tuning, so that’s where our expert guidance comes in.
To assist you we help you to focus on the following areas:
Separate Business and Personal Finances
Having dedicated business accounts shows Lenders that you’re financially organised and serious about your work.
Stay Up to Date with Your Tax
Lenders want to know that you’re meeting your obligations with the IRD. Therefore it’s a good idea to have recent tax summaries ready, and ideally with no overdue payments.
Build a Track Record of Savings
A steady savings history also goes a long way to provide a Lender with confidence that you can handle financial commitment, including a mortgage.
Being self-employed shouldn’t be a roadblock. Proving that you can manage risk, juggle finances, and plan for the future, is exactly what Lenders want in a borrower.
Not All Lenders Are Created Equal
Banks and Non-Bank Lenders vary significantly, especially for self-employed people. You don’t have to go through a major bank to get a great home loan. In fact, New Zealand’s lending market offers more choice than ever – especially for self-employed borrowers.
Depending on your personal situation, you might be better suited to:
- Non-bank lenders who offer flexible criteria,
- Near-prime lenders for those just outside the standard Bank box, or
- Alt-doc loans that use different paperwork to assess your income.
Each comes with pros, cons, and lending policies and that’s exactly where we can save you time, stress, and money. We’ll match you with the Lender who gets your situation and offers terms that support your long-term goals.
The key is preparation and having the right team on your side.
So if you’re self-employed and considering property finance for a purchase or refinance then please feel free to reach out if you need a hand, or just to have a chat about this, pick up the phone and call 0800 LENDER (536337) or email to [email protected]
