Up until the last few years, a self-employed borrower had to be operating his or her business for a minimum of two years with the capacity to provide 2 years of business financials for loan assessment purposes. Standard procedure is to use the average income over the 2 years to assess borrowing capacity. This was a disadvantage if the more current profitable year was the best reflection of how the business was really traveling. The rules are now changing!

In recent times Low Doc (no financials) loans have been introduced whereby the self-employed borrower can self-certify his or her income for loan assessment. This has proved beneficial to those who may be late in producing tax returns, however, the minimum criteria of two years operating the business has remained a critical requirement with the major banks.

Loans (refinances against residential property) to raise Working Capital for a business are generally considered by banks as 'commercial' in nature and an unacceptable purpose for a home loan product. We have alternative options available for this purpose.

With Low Doc loans the interest rate is a little higher, although Asset Angels provides a Low Doc loan with a rate only 0.28% (approximately) higher than today's common Standard Variable Rate offered by most banks! Refer to our Easy Angel Select home loan.

So what about the borrower who is enjoying a booming business, wants to buy property, but has only been operating the business for less than two years?

The good news is we have lenders available to support these self-employed people. In fact, the business may be only a day old and a loan can be obtained… even as a refinance to raise working capital (a purpose generally considered unacceptable by major banks)

Minimum of 2 years self-employed 2 year average income used in assessing borrowing capacity Lower income of the 2 years often used for assessing borrowing capacity if >20% variance Low Doc loans for Investment purposes only Property must be located in capital cities or major regional centres Clear credit history required for Low Doc loans Maximum Low Doc loan amount of $750,000 Maximum Low Doc loan to value ratio of 80% Loans to raise Working Capital for the business are unacceptable

Minimum one day self-employed Most recent years income used for assessment of borrowing capacity Low Doc loans available to purchase a Family Home Property location considered on a case by case basis Poor credit history (mild to severe) can be accommodated No maximum loan amounts for Low Doc loans Maximum Low Doc loan to value ratio higher at 90% Loans for business purposes such as Working Capital are acceptable