Residential Lending
A home loan is one of the largest financial commitments most people will make.
The right lending solution involves more than finding an attractive advertised interest rate.
Income, deposit, existing commitments, property plans, loan structure and the way a lender assesses your circumstances can all affect the outcome.
Pinnacle Finance Hub helps home buyers, homeowners and property investors understand their borrowing position, consider suitable lending options and navigate the lending process from the initial conversation through to settlement.
For business owners and self-employed borrowers, that includes understanding the business behind the income.
Understanding Your Home Loan Options
Two borrowers earning apparently similar incomes can receive very different lending outcomes.
- \Income and how it is earned
- \Employment or business structure
- \Existing Loans
- \Credit card limits
- \Living expensses
- \Investment properties
- \Dependants
- \Available deposit or equity
- \Property type
- \Loan purpose
- \Overall repayment capacity
Home Loans for Self-Employed Borrowers
Running your own business can make a home loan application more involved. Unlike an employee whose income can often be demonstrated through payslips, self-employed income may be influenced by:
- \Business structure
- \Tax planning
- \Retained profits
- \Depreciation
- \Director salaries
- \Dividends or distributions
- \Business expenses
- \Existing business debt
- \Changes in annual financial performance
Different lenders can interpret that information in different ways. Pinnacle Finance Hub can review the available financial information and help identify lenders whose assessment approach may better suit your circumstances.
The objective is to understand your position properly before deciding which lending options are worth pursuing.
How Lenders Assess Self-Employed Income
Self-employed lending often requires a closer look at the information behind the income figure.
The exact requirements depend on the lender and the circumstances.
Financial Statements
Profit and loss statements and balance sheets can help demonstrate how the business has performed and identify assets, liabilities and profitability.
Tax Returns
Personal and business tax returns may be used by lenders to confirm income and business performance.
Business Structure
Income may be treated differently depending on whether a borrower operates as a sole trader, partnership, company or trust.
Financial Adjustments and Add-Backs
Some lenders may treat certain accounting items differently when assessing income. How these are handled varies according to lender policy.
Trading History
Lenders may have different requirements regarding how long the business has operated and how much historical financial information is required.
Existing Business Commitments
Business loans, equipment finance, leases and other liabilities can also affect the overall assessment.
Understanding these factors before approaching a lender can help make the process more efficient and reduce the risk of pursuing an unsuitable option.
First Home Buyer Finance
Buying a first home involves a number of decisions that may be completely new. Before starting to make offers, it helps to understand:
- \Likely borrowing capacity
- \Deposit requirements
- \Purchase costs
- \Potential repayments
- \Pre-approval
- \Fixed and variable options
- \Offset and redraw features
- \Supporting documentation
- \The process through to settlement
- \Loan purpose
- \Overall repayment capacity
Pinnacle Finance Hub can help explain these steps and provide a clearer understanding of your potential borrowing position before you commit to a property.
The aim is not simply to obtain an approval. It is to help you understand the finance and how it fits with your circumstances.
Next Home Buyer Finance
Buying your next property may involve more moving parts than your first purchase.
You may already have:
- \An existing home loan
- \Equity in your recent property
- \A property that needs to be sold
- \Investment property
- \Other debts
- \A need to purchase before your current property settles
- \Dependants
- \Available deposit or equity
- \Property type
- \Loan purpose
- \Overall repayment capacity
Where appropriate, bridging finance may also form part of the discussion.
Property Investment Finance
Investment property lending should be considered within your broader financial position.
A lender may assess:
- \Rental income
- \Existing investment loans
- \Owner-occupied home lending
- \Other liabilities
- \Living expenses
- \Available equity
- \Loan structure
- \Overall servicing capacity
- \The process through to settlement
- \Loan purpose
- \Overall repayment capacity
For self-employed investors, how the business income is assessed can become an important part of the overall lending strategy.
Home Loan Refinancing
A refinancing review may consider:
- \Current interest rate
- \Remaining loan term
- \Available equity
- \Fixed or variable structure
- \Offset and redraw facilities
- \Existing fees
- \Switching costs
- \Debt consolidation
- \Future property plans
- \Overall loan structure
A lower advertised interest rate does not automatically mean refinancing is worthwhile. Pinnacle Finance Hub looks at the broader position, including costs, features and what you want the lending to achieve.
The Residential Lending Process
Understand Your Goals
The process starts with what you want to achieve, whether that is buying, investing, refinancing or simply understanding your borrowing position.
Review Your Financial Position
Relevant income, assets, liabilities, expenses and existing lending are reviewed. For self-employed borrowers, this may also involve business financial information.
Consider Suitable Lenders
Available lending options are considered against your individual circumstances.
Compare the Options
Relevant interest rates, fees, features and lending structures can then be compared.
Prepare the Application
Pinnacle Finance Hub helps organise the supporting information and prepares the application for submission.
Manage the Process
The application is monitored through assessment and approval, with support continuing through to settlement.
Why Partner with Pinnacle Finance Hub for Residential Lending?
Experience With Self-Employed Income
Business financials and more complex income structures are familiar territory.
Residential and Commercial Lending Experience
For business owners in particular, personal property and commercial finances can overlap.
Access to Different Lending Options
Different lenders can have different policies. Pinnacle Finance Hub can investigate options beyond a single institution.
Clear Communication
Finance can become complicated quickly. The aim is to explain the options and process in straightforward language.
Frequently Asked Questions
Can I Get a Home Loan if I Am Self-Employed?
Yes. Self-employed borrowers can obtain home loans, although the way income is assessed and the information required may differ between lenders.
Can Different Lenders Calculate My Income Differently?
Yes. Lender policies vary, and different components of self-employed income may be treated differently.
Do Self-Employed Borrowers Always Need Two Years of Financials?
Not necessarily. Requirements vary between lenders and depend on the circumstances of the application.
Should I Get Pre-Approval Before Buying?
Pre-approval can provide a clearer indication of your potential borrowing position before making an offer. It remains subject to lender conditions and final approval.
Can Pinnacle Finance Hub Review My Existing Home Loan?
Yes. Existing lending can be reviewed to determine whether the current rate, structure and features remain appropriate for your circumstances.
Is Refinancing Always Worthwhile?
Not always. Refinancing can be beneficial if it helps you secure a better interest rate, reduce repayments or find a loan that better suits your needs. However, it’s important to consider any refinancing costs, loan features, the remaining loan term and your future financial plans before making a decision.
Discuss Your Residential Finance Options
Whether you are buying your first home, moving to your next property, investing, refinancing or navigating a home loan while self-employed, Pinnacle Finance Hub can help you understand the available options and next steps.