If you’re reading this article, you probably have either been declined or somebody, maybe a Mortgage Advisor, has looked at your income and said that’s not going to work for the bank. So what can I do to get approved for a mortgage so I can buy either my first home or my next home? In this article, we’ll answer those burning questions on how to ensure you can gain pre-approval with flying colours. 

TRANSCRIPT: 

Jacque: 
So Faith, you have experience with self-employed income for many years now, is that right?

Faith: 
That’s right, yeah. 

Jacque: 
So what I wanted to do is pick your brain today because I’m not an expert on this, but I feel like you are more of an expert. I wanted to find out what do people with a self-employment type, need to do to for their income to look attractive to the banks so that they can get a mortgage. 

Faith: 
In the first instance, they should speak to an accountant. This is because there are things that the accountant can add back, for example of office expenses or depreciation, to make you look more attractive to the bank. 

Secondly, the other benefit of our accountant is they can look at projections and some banks work on three years financial results, which gives an average, especially if one of your years hasn’t been that great. There is income that we can also add back, which may not be taxable income in your viewpoint, but that the banks will use it as income.  

Jacque: 
That’s pretty awesome! You have some little tricks there, I think not many people knew about the whole projections and looking at those different things. So what about expenses? You were telling me earlier – I feel like there’s some confusion for people with self-employed income about what can be deducted from their expenses and what is not all of those kinds of things. What are you seeing? 

Faith: 
So the things that can be deducted and added back is obviously interest if they’ve got any liabilities and home office expense depreciation – hence the reason why they need to speak to an Accountant to get their finances up to scratch. We can also use net profit income and add it to your taxable income, although you technically don’t pay tax on the whole amount. 

Jacque: 
So what would you suggest people do if they’re saying but where should I start? Like I have self-employed income, I hear what you’re saying Faith, but what do I do? 

Faith: 
I would say speak to an Accountant or a Mortgage Broker that actually specialises in self-employed people because we would be able, to give you the guidance on how much income you’d actually need to ascertain in order to get a mortgage, e.g. how many years of IR3s you’d need to buy a house. 

Jacque: 
So if you have a self-employed income and you’re thinking “where do I start?” Book a 15-minute mortgage chat; you’ll have a chance to talk with Faith who has many years working with self-employed people just like you, she’ll be able to answer your questions around income, and will look at what your financials are and how you can position yourself to actually get approval from the bank.