Tradies, consultants, rideshare and delivery operators, small company directors, family businesses — a huge share of my clients write their own payslips. The most common myth I hear: “banks won’t touch me because I’m self-employed.” Not true. What’s true is that lenders assess you differently, and preparation matters far more than it does for a salaried borrower.
The standard path: full-doc
Most lenders’ default requirement is:
- Two years of personal tax returns and ATO notices of assessment;
- Company/trust returns and financials if you trade through an entity;
- An ABN registered for ~2 years (GST registration where turnover requires it).
Plenty of lenders are more flexible than the default: several will assess off your most recent year only (helpful when last year was your best), and some accept one year of trading for strong profiles. Matching that policy to your situation is half the value of using a broker.
Add-backs: the borrowing power hiding in your returns
Your taxable income usually understates what a lender can count. Things we legitimately “add back”:
- Depreciation — a paper expense, not cash out the door;
- One-off costs — e.g. unusual legal fees or a one-time equipment write-off;
- Super contributions above the compulsory rate;
- Interest on debts being refinanced or closed;
- In some cases, retained company profits where you control the entity.
I’ve seen add-backs lift assessable income by $30,000+ — the difference between a knock-back and a comfortable approval. This is exactly the working I do before any application goes in; you can sanity-check the result against the borrowing power calculator.
The tax-time trap: aggressively minimising taxable income right before applying is the single most common own-goal. Every dollar your accountant deducts is a dollar the bank can’t lend against. If a purchase is on the horizon, get your broker and accountant talking before returns are lodged — sometimes one “cleaner” year is worth far more in borrowing power than it costs in tax.
If your paperwork isn’t bank-perfect: alt-doc
Returns not finalised, or last year doesn’t reflect the business today? Alt-doc (low-doc) loans verify income differently — typically some combination of:
- BAS statements (usually 12 months);
- Business bank statements;
- An accountant’s declaration of income.
Expect a somewhat higher rate and a lower maximum LVR — but as a bridge (refinance to full-doc once your next returns are done), alt-doc is a legitimate tool, not a last resort.
What sinks self-employed applications
- Overdue lodgements — unlodged returns or BAS are an instant red flag; get current first.
- ATO debt on a payment plan that nobody disclosed (disclosed and managed is workable; hidden is not).
- Mixing business and personal spending in one account — makes assessment slower and uglier.
- Applying with the wrong lender first — a declined application leaves a credit enquiry that makes the next one harder. Policy-match before applying, not after. (How pre-approval works.)
How I run a self-employed deal
We start with your last two returns and a 20-minute conversation about how the business actually runs. I do the add-back maths, shortlist lenders whose policy fits your structure (sole trader, company, trust), and only then lodge — once, with the right lender. And because brokers are paid by the lender, none of this costs you anything.