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Specialist lenders for the self-employed

March 16, 2024

The RBA gets together to decide the fate of interest rates on Tuesday, and perhaps more than any other time in the last 18 months, they are almost certain to keep rates on hold. Curiously though, or perhaps not, of Australia’s largest ‘digital’ banks ubank (wholly owned by NAB) has delivered increased interest rates to new customers last Thursday, with some loans in their portfolio jumping by 0.1 per cent. Bankwest also pushed their variable rate up 0.1 per cent during the week.

Economists are still of the view there is good news ahead, with Westpac’s CEO joining other senior economists during the last few weeks in predicting that the next interest rates move by the Reserve Bank will be a cut to the cash rate. However the looming stage 3 tax cuts could delay any rates cuts, as the RBA waits to see their impact on inflation.

In this week’s newsletter, we look at lenders who specialise in self-employed applicants. With around 14 per cent of the workforce being self-employed, these lenders are a great alternative to better known lenders.

There are specialist lenders in Australia who cater specifically to self-employed individuals seeking a mortgage. These lenders understand the unique challenges faced by self-employed borrowers in documenting income and meeting traditional lending criteria. They offer specialised loan products tailored to the needs of self-employed individuals, providing more flexible eligibility requirements and accommodating varying income structures.

These specialist lenders typically offer the following benefits for self-employed borrowers:

Flexible Income Documentation: Specialist lenders recognise that self-employed individuals may not have traditional pay slips or employment contracts. They accept alternative forms of income verification, such as tax returns, business financial statements, or accountant’s letters, to assess a borrower’s income stability and capacity to repay the loan.

Alternative Assessment Criteria: Unlike mainstream banks, specialist lenders may use alternative criteria to evaluate the financial viability of self-employed borrowers. They consider factors such as the borrower’s industry experience, business longevity, and future earning potential, in addition to standard financial metrics.

Tailored Loan Products: Specialist lenders offer mortgage products specifically designed for self-employed individuals. These products may feature flexible repayment options, lower deposit requirements, and competitive interest rates tailored to accommodate the unique needs and circumstances of self-employed borrowers.

While specialist lenders may offer greater flexibility for self-employed borrowers, it’s essential to compare loan terms, interest rates, and fees across different lenders to find the most suitable option.

If you have any self-employed clients who need assistance with their loan application, please send them to us and we will guide them through the process.

Variable

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.

1 Year Fixed

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.

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