Need a lender that is easy on self employed

Hi there,
Am hoping someone can point me towards a lender that counts net business income (as per tax return is OK), instead of taxable income. I was gutted to find our normal lender, Westpac won't disregard carried forward investment losses from prior years (managed funds, both capital and income losses from GFC). Because of these losses, my personal taxable income is zero, yet my net business income (sole trader) for several years has been from $40,000 to $50,000. Have yet to try second tier lenders, but wonder if any major lenders are more flexible?
All ideas are very welcome.

 

Are you trying to buy, refinance, extend IO?

These days I personally think going to individual lenders is a massive risk. Perhaps you engaged a mortgage broker who know many lenders policies for your individual circumstances to get the best chance of a positive outcome.

pinkboy

 

I was not planning to shop around lenders and wreck my credit rating. Just hoping some brokers on here can give me hope that some lenders will count net biz income - for an investment property purchase, using 20% deposit from existing property equity. Ta.

 

Here’s my idea:

Find a great broker that you’re comfortable with and trust her/his expertise. Then you’ll know. Costs you $0.00 and no impact on your credit file

 

I'd get a broker but unfortunately I think you may find it difficult to secure finance due to zero taxable income. If you had a significant deposit saved that may increase your chances of securing finance.

Sounds like you need an experienced broker and possibly some paid tax advice.

 

Generally lenders use the taxable income figure to calculate your borrowing capacity.
In the past lots of lenders had alternatives, like low doc loans etc. they are rarer since the gfc...
There are still a few to choose from, and they use an income figure derived either from your transaction history, your bas statements or a letter from your accountant estimating your income.
The rates and fees are higher and there is a risk of getting ‘stuck’. A change in the credit environment could mean even less choice for low doc making it impossible to refinance.

 

It’s a common misconception, but the amount of deposit has no bearing on your capacity to repay a loan. It’s why pensioners cant finance their million dollar houses.

 

It shouldn't be too hard to get the lender to disregard the losses.

but on an income of this the borrowing capacity isn't going to be too high - prob $300k ish max

 

could always amend your tax return
then amend it again after the business is done....

 

Yep, am having to lodge this years return without carying forward losses. I then have 2 years to amend it. Sad what we have to do to satisfy rigid bank rules, aye. And I don't need a big loan, but with zero income I could borrow zero money at a good interest rate.

 

Why would you have to do that?

 

I meant having a deposit would help once there is income to report. I should have clarified that.

 

Bank (who I would prefer to stay with for now) will only consider Taxable Income for self employed, rather than Net business income (even though this is clearly shown on tax return). So I will opt to not carry forward some personal income losses from prior years. Solves problem, as net business income will now be shown as taxable income, but very annoying.

 

Obtaining a financial benefit by deception?

 

Spose you could look at it that way. I thought it was up to me whether to carry forward losses or not?

 

Yes I don't think there is any legal requirement to carry forward a loss.

But are you planning to amend your tax return after you get the loan?

 

Westpac were quite adamant they would only count income stated as Taxable Income on return and Assessment notice, even though this did not accurately reflect my actual income received. Not sure if I will amend return. Some years it is not useful to carry forward losses. But even if I did decide to do that, I believe I am entitled to do so. The bank loan officer even thought it was a good idea to not carry forward losses this year.