Self employed loan question please for brokers

Hi,

My friend is a self employed landscaper.

He has been trading for 20 months.

He has completed one tax return and NOA, his income was $24,000 in that first financial year.

After expenses, since the last financial year he is earning $6,300 per month, and has steadily earnt this every month since 1 July 2017.

But he only has one tax return completed.

He has a 20 percent deposit saved, and is looking to buy a property worth $400K.

I would appreciate the brokers' thoughts if this loan is a possibility with lenders?? I am looking to help him.

Thanks so much.

 

There's still a few lenders that would do a lo doc loan loan on this basis, I can see that it could work right now.

Very easy to do if he waits until July and gets his tax return done promptly.

 

As a rough plan, subject to numbers, may be able to do it now low doc @ 80% with a ~1% risk fee at ~5%. Refi back out to a mainstream resi loan later once available (July/August). Docs will be self declaration + latest 2 BAS. May need the abn to have hit two years for above terms (but there are other products that can do it without this with a bit more of a premium).

In terms of additional costs of doing it earlier than later, it is the risk fee (~3-4K) + a few months at a ~1% interest rate premium (~1-2k).

 

Both Resimac and RAMS will do this under their lo/alt doc policy at 80% LVR - their risk fee is 1% and rates are circa 5%. They will only require an Accountant's declaration as opposed to BAS or bank statements, etc.

Resimac's servicing/borrowing capacity calc is also quite good. Once you have full financials you can refinance to a full doc product and their rates for full doc are outstanding.

 

Thanks
Yes Rolf, $6300 per month after all expenses. Has BAS statements

 

Thanks
Yes Rolf $6300 after expenses per month.
Is the risk fee on a 300k lend $9,000 guys???

 

Bluestone like tradies. They might look at it.

 

Definitely possible but I'd weigh up the value vs waiting until EOFY this year. Once he has his returns done he would qualify for mainstream lending, saving him switching costs and the sunk costs from the initial lodoc loan held from Feb-Julyish.

This is a conversation I have regularly with newish businesses - generally most will wait unless they don't have the option. (ie divorcing and need to divide up assets by x date)