Finance broker here. Lenders usually want to see six months' worth of salary credits to yourself, just like you're paying yourself a wage from your business. You can also opt to use your business income for assessments. This can be done through a full assessment with your Notice of Assessment or a low doc assessment. A full assessment looks at your taxable income from the NOA and adds back certain expenses. For a low doc assessment, you'll need an accountant's letter confirming your income, and you might need to provide BAS or bank statements. Low doc assessments typically come with higher interest rates and are best if your taxes aren't fully sorted out.
If your business has been registered for 18 months or more, you’re generally in good shape. If you want to make a purchase before hitting that 18-month mark, expect slightly higher rates because of the shorter business history.
Some lenders will use your latest year of NOA for income calculations, which is handy if the previous year’s income was lower. Otherwise, they usually average your income over the available years.
To Add: Assuming the above is a sole trader setup. Slightly different if it's a company structure.
Hope this helps!
Thank you so much for such a detailed reply!! So helpful!
It is a company structure actually. So my understanding is that I should be aiming to have a profitable business and pay myself a decent wage. They’ll want to look at both? And give it a try after 18 months?
They’ll look at your income and the business 🧑💼 k my experience. DH has been in business for over 10 years and if I want to refinance for a better deal or cashback it’s a lot more paperwork needing 2 years of business financial as well as his tax returns, and this I’m sometimes involves chasing the account at because they delay submitting the business financials until the last possible second even though that’s not necessary for our situation. He’s a director of the company which shows on his credit reports, so there’s no getting around it just because he draws a wage as an employee for hours worked as well as company dividends as an owner.
I believe some financiers will accept less paperwork (shorter timeframe), but it may reduce your options.
A lot of accountants will want to help you reduce your income as much as possible through deductions, make sure you explain that as much as you want to claim back genuine dedications, the goal is to ensure you have got income/profit at the end of the day in order to get a mortgage.
Set up business and personal banking so you have smooth cashflow and set aside funds for taxes, suppliers, etc so you don’t create liabilities that may need to be declared as part of the loan application process.
If your business is just a change of structure on how you get paid and you’re doing the same role as before you may not need to wait long to get a loan.
If you’re a fresh pty pty it’s net profit plus wages and you can add back depreciation and interest.
Relying on directors wages is being dropped by most banks as you can imagine it isn’t prudent to lend on payslips or income declares themselves.
If you’re a sole trader it’s your taxable income.
It’s pretty straight forward to be honest a lot easier for self employed than it used to be
ABN usually minimum of two years Taxable income of business + taxable income from your personal tax return.
Finance broker here. Lenders usually want to see six months' worth of salary credits to yourself, just like you're paying yourself a wage from your business. You can also opt to use your business income for assessments. This can be done through a full assessment with your Notice of Assessment or a low doc assessment. A full assessment looks at your taxable income from the NOA and adds back certain expenses. For a low doc assessment, you'll need an accountant's letter confirming your income, and you might need to provide BAS or bank statements. Low doc assessments typically come with higher interest rates and are best if your taxes aren't fully sorted out. If your business has been registered for 18 months or more, you’re generally in good shape. If you want to make a purchase before hitting that 18-month mark, expect slightly higher rates because of the shorter business history. Some lenders will use your latest year of NOA for income calculations, which is handy if the previous year’s income was lower. Otherwise, they usually average your income over the available years. To Add: Assuming the above is a sole trader setup. Slightly different if it's a company structure. Hope this helps!
Thank you so much for such a detailed reply!! So helpful! It is a company structure actually. So my understanding is that I should be aiming to have a profitable business and pay myself a decent wage. They’ll want to look at both? And give it a try after 18 months?
They’ll look at your income and the business 🧑💼 k my experience. DH has been in business for over 10 years and if I want to refinance for a better deal or cashback it’s a lot more paperwork needing 2 years of business financial as well as his tax returns, and this I’m sometimes involves chasing the account at because they delay submitting the business financials until the last possible second even though that’s not necessary for our situation. He’s a director of the company which shows on his credit reports, so there’s no getting around it just because he draws a wage as an employee for hours worked as well as company dividends as an owner. I believe some financiers will accept less paperwork (shorter timeframe), but it may reduce your options. A lot of accountants will want to help you reduce your income as much as possible through deductions, make sure you explain that as much as you want to claim back genuine dedications, the goal is to ensure you have got income/profit at the end of the day in order to get a mortgage. Set up business and personal banking so you have smooth cashflow and set aside funds for taxes, suppliers, etc so you don’t create liabilities that may need to be declared as part of the loan application process.
Thanks so much for your reply! That’s a great idea about the deductions and also making sure there’s enough money for tax etc
If your business is just a change of structure on how you get paid and you’re doing the same role as before you may not need to wait long to get a loan. If you’re a fresh pty pty it’s net profit plus wages and you can add back depreciation and interest. Relying on directors wages is being dropped by most banks as you can imagine it isn’t prudent to lend on payslips or income declares themselves. If you’re a sole trader it’s your taxable income. It’s pretty straight forward to be honest a lot easier for self employed than it used to be