Self Employed Home Loans
There was a time when self-employed individuals had a hard time applying for a home loan due to the lack of stable income. Times have since changed and there are now loans for the self-employed that do not require much paperwork. However, these loans incur higher interest rates as they hold high risk for 
lenders.
Lenders usually require two years worth of steady income in a self-employed set-up for the loan to be untagged as risky. This is enough proof that monthly repayments can be sustained despite irregular cash flow. Otherwise, a self-employed loan will be classified as risky and will carry a higher interest rate.
Usually, loans for self-employed borrowers fall under the non-conforming type. An example of this is the no-document loan wherein only a proof of income is needed for the loan to be finalized. There is also a honeymoon or low-introductory loan wherein its interest rate for an introductory period of six months to one year is lower than the normal rate.
Loans for the self-employed usually have features of both the standard variable and fixed rate home loan. Borrowers can loan as much as 80% of the value of the property and it has several useful features such as the fund redraw, mortgage offset and repayment flexibility.
Self-employed borrowers usually use the money that they borrow to expand their business or even make investments in other businesses or properties. Lenders have a limit of $2.5 million for the amount that a self-employed customer can loan. If they can repay the loan amount regularly, it will serve as a positive note on their credit history.
However, self-employed borrowers must know that the interest rate for this type of loan is calculated on a rate for risk system. Therefore, the higher the risk, the higher the interest rate will be. Also, this type of loan is not usually available for refinancing. Nevertheless, it is the only type of loan that self-employed individuals won’t have problems dealing with.
eChoice can cater to self-employed customers who are seeking home loans. To learn more, visit the Home Loans for the Self Employed section.
