samwebsterMember@samwebsterJoin Date: 2013Post Count: 1
I have been self employed for 4+ years, which was the result of an unexpected retrenchment during the GFC (who does not have a GFC story!). Anyway the permanent position I had paid me well circa $240k pa. I was therefore able to secure two bank loans for two separate investment properties in Sydney (currently negatively geared as that was out tax strategy at the time).
The challenge I have is, whilst minimising my tax output as a sole trader, I have also minimised my net earnings. Therefore for any loan for future property, I am deemed as high risk and have yet o find a way to buy my next property. Instinctively I don;' want to sell the two properties I have. However I am open to all ideas and advice!
Thanks SamanthaJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
Sounds like you're having problems with your borrowing capacity.
If you're self employed there's certain add-backs that you might be able to use to enhance your borrowing power – such as depreciation, interest repayments, additional super, etc.
Have you spoken with a decent broker about your situation?
Jamievagirl2012Participant@vagirl2012Join Date: 2012Post Count: 47
I agree with Jamie. You'd be best to talk to a decent broker who should be able to help you out with some viable options.PLCParticipant@plcJoin Date: 2012Post Count: 400
That is the issue with a lot of self employed people. While annual revenue might be high, after deductions the taxable income is much lower which leads to a lower borrowing capacity.
As the others have said, find yourself a decent broker who can help you through the muddle. Along with what Jamie has suggested, lenders have differing servicing calcs so there might be some out there who are more sympathetic to your current situation.
TomColin RiceParticipant@fmsJoin Date: 2011Post Count: 338
Depending on you financials and how they are structured will be viewed differently by banks.
As suggested it is advisable to seek the assistance of a broker who has knowledge and experience working with self employed people.
if you have approached your bank and they have said no, it does not mean there are not other options available.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Sam, your story is a classic situation many self employed clients experience.
A decent Broker will be able to give you the options and alternatives as not all lenders requirements are the same.
Yours in FinanceJamie MooreParticipant@jamie-mJoin Date: 2010Post Count: 5,069
I just had a deal that involved two self employed applicants on relatively low incomes. I was able to make it work by being careful with the lender it was placed with and claiming back each cent from every add-back available.