If you are a business owner, showing your earnings isn’t as simple as digging out a payslip. Your income can vary from month to month and year to year — and last year’s profit and loss statements don’t always reflect the current state of your business.
While your situation might be a little more complex than those of a wage-earner, this doesn’t mean you can’t get a great value home loan when you’re ready to buy. Here are some tips to help make the process easier for you.
1. Check in with your accountant
Before you apply for a home loan make sure your finances are in good shape and up-to-date.
Get in touch with your accountant and let them know about your plans to borrow. They may be able to help by looking into aspects such as where you might be able to claim back work expenses or chase up invoices.
Have business or personal credit cards? Make sure to review your current lending and card limits as your repayments for these will be used to help calculate how much you can borrow. So if your card limit is higher than you really need, consider reducing them.
2. Organise your finances
A strong history of steady savings and regular debt repayments can make a big difference to your credit history and borrowing power. So consider a budget plan to help you save as much as possible which could allow you to have a larger deposit on your property and borrow less. This could not only save you interest, it may make it easier to secure your loan, and could mean you won’t have to take out Lender’s Mortgage Insurance.
3. Be ready to prove your income
You’ll need to make sure all your paperwork is up to date, including balance sheets, profit and loss statements, and tax returns, as you will need your most recent business financials to prove your income. If you don’t have full financials, there are options such as a low doc loan, which are designed for small business owners and considers other ways of verifying your income.
Be clear about your business and personal assets. Be aware that when you borrow in your own name, money held inside a business structure can’t be counted among your assets, unless you’re a sole trader.
4. Streamline your property search based on your affordability
Our online tools and apps such as the new CommBank Property app can help organise your home buying process. Looking at your financial position and lifestyle needs, the app has a property search function that considers how affordable a property could be and lets you search for properties that suit your lifestyle. On top of that, our calculators will tell you how much you may be able to borrow, what your repayments and your upfront costs would be, so you can be in control and have the confidence to act quickly when the right property comes up.
5. Talk to an expert
Talk to one of our mobile lending specialists. Like many small business owners, if you’re time-poor our mobile lenders can come to you at the time and place that suits you, even after business hours to talk you through the steps in the borrowing process. Looking at your individual needs, as well as the needs of your business, a lender will be able to help you choose the right home loan option.
Depending on your situation, it may only take a few minutes to get conditional pre-approval on your loan before you start your property search, so you can search with confidence — knowing how much you have to spend.
If you’re ready, speak to our home lending or mobile lending specialists today.