Self Employed Loan

Hey Team,
I've been running my business for just over 2 years however my first year financials were a -$7k PNL however my second year from 2018-19 is $160k EBITA.
I believe CBA will need 2 years of financials but will take 100% of the most recent year as part of my earnings?
Additionally, I scaled the business so it's managed by a team and I have taken up full - time employment which pays $80k + $5k car allowance.

Now im looking to purchase another investment property, will CBA take into account $160k+$85k as my income?

Also, when I put through my financials on the CBA calculator it tells me I can borrow $X, how accurate are the numbers the calculator produce?

 

The CBA only requires one year of financial if the loan is an 80% LVR or lower.

Starting the new full time job raises the question of how well your business will perform moving forward. I'd suggest waiting until you've been in the new job for at least 3 months and show the bank a BAS statement that is consistent with previous statements, to assure them that the business isn't going backwards because you're not there as much.

Like all online calculators, I would not rely on the CBA's calculator at all. IMO these calculators are a marketing tool to get you to call the bank and they tend to suggest you can borrow more than you really can. As best I can determine, they don't even reflect the bank's actually policies on any number of components.

 

ANZ will take on years financials however the issue here isn't necessarily the one years financials part but the fact that you want a lender to take your current PAYG income and your previous self employed income as one year.

Is this what you are asking the lender do or have we misread that part?

 

Thanks for the response lads. Yeah ideally both incomes from my most recent tax return being the one i just completed + the new PAYG income. Is that not possible? A lender from Lendi told me that it would be possible so that's why i thought it would be okay.
Please correct me if i'm mistaken.

Alternatively, if i work and get a BAS statement that would technically be my most recent indication of self employed income right? Would that suffice as a total collective income?

 

As I indicated before, lenders will question if the business is still running if you're now in a full time PAYG job. The purpose of additional BAS statements is to demonstrate that the business is running whilst you're working elsewhere.

If you can show that both income streams are operating, lenders will accept both.

 

Awesome! Thanks bud - appreciate it

 

In a nutshell, you would need:

- Statements of your business transaction account showing income still coming in/BAS statements
- ITRs/NOA (Assuming sole trader)
- Employment contract/previous two payslips for the PAYG work
- Rental appraisal/existing rental agreements for the investment property

You can bet that your scenario will raise a lot of questions

The questions i would ask you if i was assessing this loan:
- What happened between those two years?
- Did this include any sale of assets/other income that might be treated differently in a lenders eyes?
- I would want to see cash flow projections for the next 1-2 years

Sure you can approach a lender who only requires one year but a responsible credit manager would be asking for the above, previous history and exactly how you are expecting to juggle the two jobs

Something to consider would be:
- Can you service the loan with only your PAYG income + proposed rental + existing debts (including any business debts) + GLEE etc, if so then most policy states that you only need to verify income that is sufficient enough to repay the loan

Good luck

 

You would be best to use a broker and stay off the online lender sites and online loan calcs etc, they're all pretty much useless and misleading. Also in regards to AJP's post above, if you use a broker they can advise which lenders don't need all that info and will just use the one years financials if that's what you need.

 

CBA will balk at the increase between years. Although they take last years figures you have to show 2 years P&L. I have had loans declined when big increase between years. Start up phase may be OK but expect questions!

If you want to use both current payg and the historical SE income you may need to show that the SE income level is even higher now to accommodate the added management costs. Or you might get away with PAYG + SE income (but less what you paid yourself from the business that year).