Many seasoned business owners are perplexed by how difficult it can be to obtain Self-Employed Home Loans.
Historically, one of the easiest types of finance to obtain was home finance. However, as many have discovered, this is no longer the case for a variety of reasons.
The good news is that, despite the recent developments, finance is still available to business owners – you just need to know how to go about it.
Self-Employed Home Loans – Why is it more difficult?
Historically, many Business Bankers were able to approve Self-Employed Home Loans for their clients.
However, as a result of the Banking Royal Commission, stricter rules for Home Finance were imposed, and many Lenders separated their business and home finance streams.
As a result, Business Bankers were no longer able to approve Home Finance.
When a client required Home Finance, they could make a recommendation, but it had to be approved by a different Division.
This separation of authority left many business owners perplexed and frustrated.
Self Employed Home Loans – A Glimmer of Light
While the detailed information required for Home Finance remains largely unchanged, we are beginning to see more flexibility, with some Lenders allowing their Business Bankers to approve Self-Employed Home Loans for their clients.
This is common sense, as a Business Banker has:
- A more in-depth understanding of the business and importantly, its financials
- A better understanding as to the inherent risks associated with the Home Finance as a result of this
Home Finance Can’t be Assessed in Isolation!
For the vast majority of business owners, the performance of their business and personal financial arrangements is inextricably linked.
If the business fails, it has an impact on both the business and personal borrowings. All of the cash comes from the same bucket!
As a result, when we are asked to assist business owners with Home Finance, we begin by evaluating the consolidated Group position to ensure that both the business and personal borrowings can be comfortably serviced.
We approach Lenders only after this step has been completed.
The Self-Employed Home Loan Advantage
Whilst there is a bit more work involved in this approach, the benefits for those seeking a Self-Employed Home Loan include:
All necessary information is gathered and analysed before approaching Lenders – this reduces delays and builds creditability
Allows restructuring of Group Facilities to be considered with a view to improving overall debt servicing capacity if needed
Identifies issues that, if addressed, would improve negotiating power, pricing, terms and conditions, and so on
Presenting a stronger case to prospective Lenders by demonstrating serviceability on both an individual and consolidated Group basis
Summary
The reality for many business owners is that their personal borrowings cannot be viewed in isolation to those of the business.
As stated earlier, the performance of the business and the servicing of the total group borrowings is inextricably linked.
To approach home finance without this understanding, can only lead to unnecessary frustration and delays.
If you are seeking Self-Employed Home Loan Finance and would like to learn more, don’t hesitate to get in touch.
