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How to get a mortgage with a main bank if you are self-employed

Some people think, “Hey, I’m self-employed. It’s really hard for me to get a mortgage.” Well, it’s actually not. There’s a lot of small businesses in New Zealand. You know, New Zealand is made up of small business owners and it doesn’t matter if you’re like a contractor working at Spark, maybe you own a dairy and you’ve got some other part-time, like online income coming through, or maybe you’ve got a small drain laying business.

The thing is, what you need to figure out it is, do I have up-to-date financials, one or two years? Like, you know, most banks are going to want to see two years of financials, and if you don’t have that, don’t stress. What we really want to get if we don’t have updated financials that are relevant for this period, sometimes the banks are going to let you get projections, and if the projections are strong, the banks will use that as what’s called a mitigant, it’s kind of like a, you know, just in case kind of thing.

If you do not have strong financials or financials available, what you can use is some mortgage options, low doc options. So this isn’t going to be with a main bank. There are no doc options. If you’re self-employed and you’ve got some doubt in your mind about your lending options, and especially if you don’t have a business bank or someone that’s being helpful, what you really want to do is talk to a mortgage advisor that has access to all of the banks…so a lot of the brokers don’t actually have Kiwibank, for example, but across all of the main, big four Aussie banks, and Kiwibank, and then you’ve got the other New Zealand banks, TSB, SBS, Co-operative.

When self-employed people should use a second-tier lender for their mortgage

You know, there’s a bunch of other banks out there, not just the main banks. There are also non-bank lenders, sometimes they’re called second-tier lenders. So this is the likes of RESIMAC, Liberty, Bluestone, FMT, Avanti. There’s quite a few. There’s probably 20 plus lenders in New Zealand. They’re going to be decent options when it comes to mortgages, and the thing to bear in mind is these non-bank lenders, their interest rates are only marginally higher than what you’re seeing advertised at the main banks.

And what you want to do is get your mortgage set up, settle this property that you’re looking to try and buy, and get a future plan in place that you refinance it back to the main bank. To give you a scenario of what it might look like is…let’s say you started a business nine months ago. Things have been going really well. You want to upgrade the family home. You need an extra 300K from the mortgage you’ve got at the moment.

What you might need to do is refinance or, you know, you might be buying… let’s say it’s a second property, going to refinance the existing lending, let’s say maybe to a Liberty or RESIMAC, interest rates probably going to be under 6%. Some of these documentation or financials and projections might be needed, might not, and you might end up being at this non-bank lender for 6 to 12 months and then we will look to refinance you back to the bank in a year or two based on what the finances are showing that you can do.

So you might be on an interest rate, let’s call it 5.5% percent for a year or two, and then you’re going to be back down on those interest rates closer to 4%. So self-employed people, they are buying properties all the time. Don’t let it be an excuse, all right?

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