We all know that property is a game of finance, but if you’re self-employed, getting a loan from a bank isn’t always that easy.
If you’ve got a payslip, most banks are pretty happy to talk to you, but if you’re someone who is running a business, or worse, just getting started with a new business, your options are likely going to be a lot more limited.
However, just because you’re self-employed, doesn’t mean your property goals are over. But it does mean you need to be more organised and proactive.
For the most part, the major banks will lend money to self-employed individuals. Typically they do require you to have been registered for a few years with an ABN and also have a number of BAS statements that you can use to verify your income.
However, as we know, when you’re starting a business, you are not likely going to be pulling in much money in those early days.
If you are just getting started, you might not want to take on excess debts and put any more pressure on yourself. But if you are established, you can still get finance.
Typically non-bank lenders will allow you to get finance if you have been registered for a few years. Many will also only need six months of solid trading history to verify your income.
What that means is that if your business didn’t make any money in the first year, but by halfway through the second year, you are starting to make some solid numbers, they will possibly accept that as a form of income verification. That might be something like two BAS statements that can support your income claim.
They might also want you to get an accountant’s declaration for further proof.
But the key here is that there is a way that you can borrow, even if your business is still growing in its early stages.
The other important point to note is if you are thinking about getting into business and starting something, you should be preplanning things like finance.
The first thing you must do is register the business and get an ABN.
You don’t need to make any money or even trade, but the fact that you’re registered can be very important down the track when you eventually decide to get started.
It doesn’t matter if you don’t have any profits or revenue to show, just go out and register so that you are prepared, even if you are just considering starting a business.
This is also important for people who might own a property portfolio, a single investment property or their own home.
Because if you go out and start a business, but haven’t planned for the finance side of things, it will be tough to get the funds to refinance.
Imagine a scenario where the RBA slashes the cash rate sharply. This is the perfect time to be refinancing. Last time this happened you could lock in a three-year fixed-rate loan at just 2%.
Being prepared and ready to act is one of the ways we can get ahead in property. While others are stumbling along, if you’re organised and pre-planned, you can take those opportunities that others miss.
Engaging a trusted buyers advocate through Henderson’s buyers advocacy service is your best chance at navigating the competitive real estate market.
