When you work for yourself, your income usually isn't as simple as handing over a couple of payslips.
You might operate as a sole trader, through a company or trust, or have income coming from several different places.
That doesn't mean getting a home loan has to be complicated.
It just means understanding how lenders look at the numbers.
Depending on your business structure and the lender, they may look at things like:
And this is where lenders can differ.
One lender might use an average of your income over a period of time, while another may place more weight on your most recent results.
Same business. Same numbers. Different lender. Potentially different result.
Your taxable income doesn't always tell the whole story.
Some expenses shown in your business financials may be treated differently when a lender assesses your income.
Depending on the lender and your circumstances, certain expenses may potentially be added back when calculating income for lending purposes.
This is another area where lender policies can vary considerably.
Not every self-employed borrower fits neatly into the standard box.
Some lenders offer alternative documentation options, sometimes called alt-doc loans, which may allow income to be verified using different supporting information.
These loans have their own requirements, costs and lending criteria, so they're not automatically the right option simply because you're self-employed.
Being self-employed doesn't necessarily mean you can borrow less.
It means how your income is calculated matters.
Understanding which lender policies may suit the way your business operates can make the home loan process much clearer.
The Home Loan Nerds can help you understand how lenders may assess your business income and explain the differences in plain speak.
We know a lot about home loans so you don't have to.
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