Self Employed

When applying for a home loan as a self‑employed borrower, lenders assess your financial position based on your business structure — because each structure affects how income, liability, and documentation are presented. Here’s how it works across the four main self‑employment types in Australia:

Sole Trader

Key focus: personal income and stability

• Income proof: Two years of personal and business tax returns, BAS statements, and ATO Notices of Assessment.

• Assessment: Lenders treat your business income as personal income since you and the business are legally the same.

• Risks: Unlimited liability means personal assets are exposed, so lenders look closely at your debt‑to‑income ratio.

• Tips: Keep business and personal accounts separate, maintain consistent earnings, and ensure tax obligations are up to date.

Company

Key focus: company performance and director income

• Income proof: Two years of company financials (profit & loss, balance sheet), company tax returns, and your personal tax returns.

• Assessment: Lenders examine both company profitability and your director’s salary/dividends. They may add back non‑cash expenses (like depreciation) to calculate serviceability.

• Risks: Limited liability protects personal assets, but lenders may require personal guarantees from directors.

• Tips: Ensure company financials show steady growth and avoid large one‑off expenses that distort profit.

Partnership

Key focus: shared income and liability

• Income proof: Partnership tax returns, individual partner tax returns, and partnership agreements.

• Assessment: Each partner’s share of net income is used to determine borrowing capacity. Lenders check that partnership debts are managed responsibly.

• Risks: Shared liability means you’re responsible for the partnership’s debts, so lenders assess both partners’ credit conduct.

• Tips: Keep clear records of income distribution and ensure both partners maintain strong personal credit profiles.

Trust

Key focus: trustee control and beneficiary income

• Income proof: Trust deed, two years of trust tax returns, and beneficiary distribution statements.

• Assessment: Lenders look at how income flows from the trust to you — whether as a beneficiary or trustee. They may require a guarantee from the trustee or directors if it’s a corporate trustee.

• Risks: Complex structure; lenders scrutinize the trust deed to confirm who legally owns and controls assets.

• Tips: Keep trust documentation current, ensure distributions are regular, and work with an accountant familiar with trust lending.

General advice for all structures

• Maintain consistent income and clear financial records for at least two years.

• Keep tax returns lodged on time — lenders won’t proceed without them.

• Use an experienced mortgage broker who understands self‑employed lending nuances.

• Prepare a summary of your business performance to help explain fluctuations or growth trends.