Home Loans

Better Home Loans For Busy Business Owners

We help self-employed business owners source and structure a better home loan, so you can potentially save thousands in interest & fees, and get on with building your business (and your life)

Getting A Home Loan When You Own A Business Can Be Tricky

Which Of These Challenges Are Concerning You Most?

Like many self-employed business owners looking for a home loan, are you…

Too busy to compare dozens of loans from multiple lenders to ensure you get the right option for your situation… and wish you had a trustworthy expert to do all the legwork for you?

Worried about getting declined (and having your credit rating damaged), and wish you had someone to help you get approved the first time?

Concerned your local bank or broker may not have the product options (or expertise) to help you structure your loan for maximum borrowing capacity, and flexibility?

Unsure if your current loan is the right one for you, right now… and want a second opinion to make sure you’re not needlessly overpaying?

And like most self-employed business owners, are you looking for an easier way to get the right home loan, so you can get on with building your business and your life?

 

Self employed-business owners

Many self-employed business owners have these same questions and concerns. That’s why we developed a no-obligation Consultation where you can get the information you need to get fast approval for a better home loan.

Need a home loan?

Discover the types of home loans available and find the perfect loan for your new home with our comprehensive guide

Are you in the market for a new home? If so, one of the most important steps in the home-buying process is securing a home loan. In 2021 alone, approximately 35% of households in Australia have a mortgage.

If you’re thinking of applying for a home loan, this comprehensive guide will provide you with all the information you need to know about it. From understanding the types of home loans available to navigating the application and approval process, this guide’s got you covered.

Types of home loans

When it comes to home loans, there are several options to choose from. Understanding the different types of home loans can help you determine which one is best suited for your needs

1. Fixed-rate home loans

A fixed-rate home loan is a popular option for many homebuyers. With this type, the interest rate remains unchanged throughout the loan term, providing stability and predictability in your monthly repayments. This means that regardless of any changes in the market, your interest rate and monthly payments will remain constant. You can seek assistance from the best mortgage broker Sydney home owners can recommend, and inquire further about fixed-rate home loans.

The benefits of a fixed-rate home loan include the following:

  • Predictable repayments: With a fixed interest rate, you can accurately budget your monthly payments, knowing they won’t change over time.
  • Protection from interest rate hikes: If interest rates increase, your fixed-rate loan remains unaffected, providing peace of mind against financial strain.
  • Easier planning: With a fixed rate, you can plan your finances with confidence, as you know exactly how much you will need to repay each month.

It’s important to note that while a fixed-rate home loan provides stability, it may not offer the same flexibility as other loan options, especially if you plan to pay off your loan early or make additional repayments.

2. Variable-rate home loans

A variable-rate home loan is another popular choice for homebuyers. With this type of loan, the interest rate fluctuates with market conditions, potentially resulting in changes to your monthly repayments over time. When interest rates go down, your repayments decrease, but if interest rates rise, your repayments will increase.

The advantages of a variable-rate home loan include the following:

  • Potential interest rate savings: If your repayments decrease with the decreased interest rates, you can save money on your loan.
  • Flexibility: Variable-rate loans often offer more flexible features, such as the ability to redraw funds if needed or make extra repayments.
  • Lower upfront costs: Variable-rate loans may have lower establishment fees and ongoing costs compared to fixed-rate loans.

Do be aware that variable-rate loans can be more unpredictable, as they are subject to fluctuations in interest rates. You should be prepared for possible changes in your monthly payments and see that you can afford higher repayments if interest rates rise.

3. Split rate loans

A split home loan is an option that allows you to divide your loan into both fixed and variable portions. This offers a blend of stability and flexibility, giving you the best of both worlds. You can allocate a specific percentage of your loan as fixed rate and the remainder as variable.

Some of the benefits of a split home loan include the following:

  • Stability and predictability: The fixed portion of your loan provides repayment stability, allowing you to budget and plan your finances accurately.
  • Flexibility and potential savings: The variable portion of your loan offers flexibility, allowing you to take advantage of potential interest rate savings or make extra repayments.

A split home loan can be a suitable option if you’re unsure whether to choose a fixed or variable-rate loan. It provides a level of protection against interest rate fluctuations while still offering flexibility.

4. Interest-only home loans

Interest-only home loans require you to only pay the interest portion of the loan for a certain period, typically 5 to 10 years. During this interest-only period, your repayments will be lower as you are not paying off the principal amount. After this period, the loan is converted into a principal and interest loan, and your repayments will increase as you pay off both the principal and interest.

The benefits of an interest-only home loan include the following:

  • Lower repayments in the short term: During the interest-only period, your repayments will be lower, freeing up cash flow for other purposes.
  • Potential tax benefits: If it’s a loan for investment property, you may be able to claim the interest payments as tax deductions.
  • Flexibility for investors: Interest-only loans can be attractive for property investors who are planning to sell the property before the principal is due.

While this type of home loan may provide short-term financial relief, you will need to make higher repayments once the interest-only period ends. It’s crucial to have a strategy in place to pay off the principal amount and consider the impact on your overall financial goals.

By understanding the different types of home loans in Sydney, you can make an informed decision that aligns with your financial goals and circumstances. Consider your preferences for stability, flexibility, and affordability when choosing the right home loan for you. Don’t hesitate to seek advice from Pro Options Sydney mortgage brokers to help you navigate through the complexities of these loan options.

How to finance your home loan when you’re self-employed

Being self-employed offers many benefits, such as flexibility and independence, but it can present unique challenges when it comes to securing a home loan. Lenders typically have stricter requirements for a home loan for self-employed individuals due to the variable income nature of their work. However, with careful preparation and documentation, self-employed individuals can still obtain a home loan with competitive terms. Here are some essential steps and tips to finance your home loan successfully as a self-employed individual:

1. Organise your financial documents

Lenders will scrutinise your financial records to assess your income stability and ability to repay the loan. Gather the following documents:

  • Tax returns: Provide your personal and business tax returns for the past two to three years to demonstrate your income history.
  • Financial statements: Include profit and loss statements and balance sheets for your business.
  • Bank statements: Furnish your personal and business bank statements to verify your cash flow.
  • Notice of assessments: Submit your latest Notice of Assessment from the Australian Taxation Office (ATO).

Meticulously organizing and presenting your financial documents will provide lenders with a clear and comprehensive view of your income history and financial stability.

2. Show consistent income

Lenders prefer steady income streams for self-employed borrowers. If your income fluctuates, provide evidence of consistent earnings over the past few years. A stable income history can boost your credibility and improve your loan prospects.

3. Minimise deductions

While maximising tax deductions is a common practice for self-employed individuals, it may not work in your favour when applying for a home loan. Reducing your taxable income by claiming numerous deductions might show a lower earning capacity to lenders. Consider deferring some deductions or consulting with an accountant to optimise your financial situation for the loan application.

4. Demonstrate savings and equity

Having a substantial savings history and a sizable deposit can strengthen your home loan application. A larger deposit reduces the lender’s risk and may lead to better loan terms. Additionally, if you already own a property, using the equity as a deposit for the new home can be advantageous.

5. Keep personal and business finances separate

Keep separate bank accounts for business and personal finances to provide a clear picture of your income and expenses. This separation can help simplify the loan assessment process and avoid any confusion about your financial standing.

6. Consider low-doc home loans

If you have difficulty providing traditional documentation, explore low-doc home loan options designed for self-employed borrowers. Low-doc loans typically require fewer documents but might come with stricter lending criteria and higher interest rates.

7. Build a strong credit history

Maintaining a good credit history is essential for all borrowers, including the self-employed. Check your credit report regularly and ensure timely payments on credit cards and existing loans. A solid credit history can improve your access to the best home loans Sydney lenders can offer. It can also increase your chances of approval, and even potentially result in more favourable interest rates.

8. Seek professional advice

Navigating the home loan process as a self-employed individual can be complex. Consider seeking advice from a mortgage broker with experience in dealing with self-employed borrowers.

Pro Options home loan brokers Sydney can guide you through the application process, help you find suitable loan options, and increase your chances of securing a favourable home loan.

The bottom line

Buying a home and securing the right home loan is a significant financial decision. It’s crucial to research, compare, and seek professional advice from home loan experts Sydney if needed. Understanding the types of home loans, eligibility criteria, and repayment strategies will empower you to make informed choices. Remember to consider costs, avoid common mistakes, and always review your financial situation regularly to ensure your home loan remains suitable for your needs. Happy house hunting!

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How We Help Business Owners Get A Better Home Loan

Over the past 13 years we’ve helped hundreds of self-employed business owners get home loans with better interest rates, lower fees, and more flexible conditions.

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