Being a self employed individual gives you a lot of flexibility and potential to have unlimited growth financially, however it does have its own set of challenges. They key challenge we see is when you are looking to borrow money. Obtaining a mortgage can be particularly difficult for self-employed Australians due to various factors. One of the main challenges lies in the limited or fluctuating income documentation that self-employed individuals typically possess. It becomes harder to prove stable earnings and demonstrate the ability to meet loan repayments consistently. Moreover, the lack of traditional employment benefits, such as paid leave or superannuation, adds to the perceived risk for lenders. Additionally, stringent lending criteria, higher deposit requirements, and the general perception of higher risk associated with self-employment contribute to the complexities self-employed Australians face when trying to secure a mortgage. This is why having an experienced mortgage brokering team like WizWealth Finance can make the process much easier for you. The WizWealth team can help you find the most cost effective product suitable for self employed individuals and the prepare your application in line with the requirements defined by the lender policies.
Why it is different if you are self-employed
Lenders assess self-employed individuals differently from PAYG (Pay As You Go) applicants due to the inherent differences in income stability and documentation. Self-employed individuals often experience fluctuating income streams, making it challenging for lenders to accurately predict their future earnings and assess their ability to meet mortgage repayments consistently. In contrast, PAYG applicants have a stable income with regular payslips, providing lenders with greater confidence in their repayment capacity. To compensate for the uncertainty surrounding self-employment income, lenders typically require additional documentation, such as tax returns and business financial statements, to evaluate the financial viability and stability of self-employed borrowers. This differential treatment aims to mitigate the perceived higher risk associated with self-employment and ensure responsible lending practices. Working with WizWealth Finance can increase the odds of getting approval.
Exploring Variable Rates
When it comes to self-employed mortgage rates you have variable rate options and fixed rates. A variable-rate home loan is one that offers borrowers a more flexible approach to help with managing their finances as they buy a new home. This means as circumstances change you can re-manage your payments with the lender if it is needed. Some lenders also offer additional options such as making extra payments when you have additional funds at no charge and having the option of a redraw to gain funds when you need them. With WizWealth Finance’s help you could choose variable interest rate home loans that start at 5.69%* . There are different rates available based on the loan to value ratio for the amount that you need.
* Rates starting from 5.69% as of 18/07/2023**Subject to Lenders assessment criteria
Choosing Fixed Rates
Fixed home loan options when exploring self-employed mortgage rates are your other choice. This is a more stable plan where you know what the repayments will be for the loan for the whole time. Just one fixed rate for its duration. For something like a 3 year plan fixed rates start at 5.44%* . Fixed rate means that there is likely to be an early repayment fees or break costs in case you decide to pay it off during the fixed rate term. If you are looking for flexibility to make an early repayment, you could even choose to split some of the loan so some of it fixed and some if it is variable.
* Rates starting from 5.44% as of 18/07/2023**Subject to Lenders assessment criteria
Talk to us to learn more!
If you are looking to understand more about your mortgage options for self-employed, give us a call or use our website to get in touch at WizWealth Finance. We focus on establishing long term partnerships with our clients to ensure their ongoing financial strength. We maintain a professional but flexible approach to help as many people as we can achieve their dream of buying a new home. We hope we can help you too!
