Why self-employed home loan seekers should consider a near prime mortgage

03/11/2020
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Being your own boss is great, but getting a home loan when you’re self-employed can be tough. Without the right documentation (and the right amount of documentation), it can feel impossible to get into your own home. However, there is a solution.

If you’re self-employed and need a mortgage, a near prime home loan may be a competitive alternative for you.

 

WHY IS IT SO HARD TO GET A MORTGAGE WHEN YOU'RE SELF-EMPLOYED?

When evaluating your application, a lender will look at a lot of different aspects of your finances, including:

  • Your spending
  • Your existing debts
  • Your income

When you’re self-employed, your income can be more variable. Lenders want to be sure that you’ll be able to service the loan regularly and not miss any repayments.

If your income isn’t always the same, this can be harder to prove.

That’s why most lenders will ask for some documentation that shows your self-employed income, often over the course of several years. If you don’t have that documentation (and some self-employed people don’t), you may struggle to get a mortgage through a major bank.

 

ARE BANKS THE ONLY OPTION FOR A MORTGAGE?

Thankfully, the major banks aren’t the only people who provide home loans in New Zealand. There are also non-banks who specialise in helping people get home loans in unique situations - that includes being self-employed.

Non-bank lenders have specialist products designed for people who don’t meet the main bank lending requirements. You might see these as ‘self-employed home loans’ or ‘low-documentation home loans’.

These typically come in two flavours: specialised and near prime, both of which can get you into a home using your self-employed income but without the same level of bank documentation that is often required.

 

SELF-EMPLOYED NEAR PRIME HOME LOANS

Near prime home loans are a new type of home loan designed specifically for people who are just outside of main bank lending criteria.

They have low interest rates, often at similar or in some cases lower than equivalent main bank loans, and don’t need as much documentation.

Avanti Finance, for example, offers a near prime home loan product that only requires:

  • 12 months of financial statements
  • GST returns
  • An accountant’s declaration

If you’re self-employed, you can go to a near prime lender instead, get into your new home sooner, and get the same (or lower!) equivalent interest rate without the same challenges for ‘the right’ documentation.

Speak with your advisor today about a near prime home loan through Avanti Finance or apply now directly.

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