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How to navigate buying a home when you're self-employed

More and more people are choosing to be their own boss and work solo. In fact, as of 2024, 15 per cent of the Australian workforce is choosing to embrace 'solopreneurship'.

It’s a steady increase from previous years – including a spike during the pandemic where the number of self-employed Aussies was 2.2 million – and is likely to grow every year as people chase flexibility, financial independence and increased creativity.

While there are many benefits to being self-employed (a short walk from the 'office' to the kitchen fridge being just one), the process of applying for a home loan won'talways be straightforward. 

So, if you want to be your own boss in the office and at home – how do you navigate the process? We spoke to our very own Daniel Pertot, Owner Manager of the BOQ Noosa branch to find out.

Get to know the lender

Experts say the first step in applying for a home loan is to find a lender that takes the time to get to know you and your personal financial situation.

'This is incredibly important,' says Daniel. 'If you align yourself with the wrong lender – whether that’s someone who is inexperienced in banking or inexperienced in the field of self-employed customers – it can be the difference between getting your loan approved or not.'

As an Owner Manager, Daniel understands first-hand what it’s like to run a small business and the importance of delivering a tailored, warm, and personalised approach for clients who are looking to secure a home loan.

'Being self-employed myself, I understand the difficulties around trying to borrow money and getting the ideal finance to purchase your home,' says Daniel. 

'It can be tricky and therefore you need to make sure that you align yourself with the right people to support you.'

Talk before you shop

Everyone loves a house snoop, and it’s tempting to do the rounds of open homes in your favourite area before you submit a home loan application and get pre-approval.

However, experts advise chatting to a lender before shopping for your dream abode – especially when you’re self-employed. 

'Everyone knows how emotionally attached you get once you start shopping,' says Daniel.

'However, you don’t know what you can afford so you’re looking at your dream home and you may not be able to get there.'

Daniel advises self-employed, budding first home buyers to first sit down with their lender and discuss the reality of borrowing and the loan amount they can realistically service. Talk through what is required to achieve your financial goals. 

 'If you’re self-employed, it’s unlikely you will be able to implement something overnight,' says Daniel. 'By taking the time to plan, you could go from a "sorry, not yet" to a "congratulations, go shopping".'

It is also important to realise asset finance, credit cards, and other debits are considered during the home loan application process.

Navigating the T-word 

The word ‘tax’ can spark fear into the hearts of many small business owners or self-employed operators; however, experts say it is vital to know and understand your financial position.

For self-employed people applying for a home loan, the lender may look at two years of tax returns and take an average of those years, explains Daniel. 

He says, it is vital to ensure you haven’t had one unusually strong year and one more insignificant year as this might hurt your figures in the eye of the lender.

'Unfortunately, some business owners can be uneducated around their own figures,' says Daniel. 'A lot of the home loan application process is around their tax return income. I always tell my clients to ensure they have an accountant who will give them some tax planning and have strategy meetings so when they come to me, they know their numbers.'

Have a home loan game plan

The pathway to home ownership for the self-employed may be achieved with a clear strategy and patience, and a lender that is ready to support you.

'We take a personalised approach and always try to give our self-employed clients a game plan, not a roadblock,' says Daniel.

Ask lots of questions, even the potentially silly ones, just to make sure you have a clear path and plan to your end goal of buying a home. Just like starting and running your own business, this is a big outlay that will work so much better with some proper forecasting, professional support, and a foolproof plan of attack.

We're the 'help you get a home loan' kind of bank

If you're self-employed and looking at your options to becoming a home owner, get in touch today and one of our lending experts can discuss your options.

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