Self Employed Lending Myths Busted! (By PEPPER MONEY)
Myth: Lenders only accept 40% of income for Alt Doc servicing.
Busted: Alt Doc lending starts with a client declaration. The client declares their actual income and then can utilise BAS or Bank Statements to demonstrate this figure. Pepper will accept demonstrated income, even if it is higher than 40% of turnover.
Myth: Lenders don’t allow tax debts to be consolidated.
Busted: Pepper can refinance tax debts, utilising available equity in either Owner Occupied or Investment properties, in turn securing a significantly lower rate than that offered by the ATO.
Myth: Alt Doc lending is for Self Employed clients that don’t have their act together.
Busted: Alt Doc lending is a great way for businesses to be assessed on its most recent performance. Consider where 2019 tax returns may not be available, a full doc applicant would today be relying on returns from 2017 and 2018 and assessed on the business performance from the middle of 2016. For a business that started just that year, or the year before, there may have been significant growth unaccounted for in those earlier years.
Myth: Income from young ABN’s trading less than 2 years cannot be accepted for servicing.
Busted: Pepper will allow income from a business as young as 6 months up to 2 years to be utilised towards servicing.
Myth: Commercial debt can only be refinanced to an investor rate, as the purpose is business use.
Busted: At Pepper, we determine our rates by the security used, not the purpose of the loan. So from refinancing business debts and tax payouts to applications for cash out for business purpose, this will all be at a low Owner Occupied rate if secured against an Owner Occupied property used as security.
Myth: Lenders won’t allow cash out for business cash flow purpose.
Busted: Again, business cash flow is a very reasonable purpose for cash out approvals at Pepper Money.
Myth: There is no way to refinance a low doc client to a different lender on another low doc option.
Busted: At Pepper, we allow clients to refinance existing low doc debts at other financial institutions to an Alt Doc product at Pepper
Myth: I require both BAS and Bank Statements to verify income for Alt Doc loans.
Busted: My favourite for last. Pepper are approving Alt Doc loans on either BAS or Accountant’s Letters or Bank Statements only. Prime clients will require two of those three documents, Near Prime and Specialist clients only require just one of those supporting documents.