Why you'd be mad not to use a broker if you're self-employed

One of the biggest misconceptions I see is clients assuming they know whether their loan is straightforward: "I earn good money." "We can comfortably afford the repayments." "We've saved a decent deposit." To them, it's simple.

This is because they don't know where the problems are. And why would they? They're experts in their business - not in lender policy. That's my job!

The part of mortgage broking most people never see: finding the problems before the bank does.

This week I'm working on a loan for a lovely young couple who are buying a home. They can absolutely afford it. There's no question about that. What makes it complicated is everything sitting underneath the surface.

The husband is self-employed. His accountant has legitimately structured the business to minimise tax, which means the last prepared financials showed a small loss. From a tax perspective, that's perfectly sensible. From a lending perspective it's going to be a headache unless you know which lenders will add back depreciation and how much they'll allow. We're also using BAS statements, which immediately rules out many lenders. Oh, and this financial year their accountant set up a partnership for the trading business to distribute management fees too, so we'd like to take that income into account as well, please.

Then there's the wife. She's PAYG and currently on maternity leave but is returning to work a month after settlement. She has a letter from her employer confirming her return date and her salary, and the family has more than enough savings to comfortably cover the period before her income resumes. Again, completely reasonable. But not every lender sees it that way....that's for sure.

Had this couple had walked into their everyday bank, I'm sure the first meeting would have gone well. A quick conversation, a rough assessment, and probably something along the lines of, "Yep, I think we can help."

And then later, the questions start: Can we use the return-to-work income? Can we accept one year's financials? Will credit add back depreciation? Can we rely on the BAS?

Every answer depends on policy.

Before long, the clients are supplying more documents, answering more questions, and wondering why the process has suddenly become so difficult when they were told it looked fine at the start.

My job isn't just to fill in an application. My job is to find every potential problem before the application is submitted. I'm actively looking for the warts - not because I enjoy making things difficult, but because I'd rather know on day 1 that Bank A won't touch it and Bank B will approve it - rather than spend 3 weeks finding that out the hard way.

That's why I ask so many questions. That's why I rifle through the financials. That's why I spend so much time understanding how your accountant has structured your business and why, what your current income really looks like, and what story the numbers tell.

For self-employed borrowers in particular, borrowing isn't about finding the lowest interest rate, although I try. The work is finding a lender whose policy matches your circumstances... two very different things.

You don't know what you don't know. But I do. That's why using a broker, particularly if you're self-employed, isn't a luxury. After arranging finance for dozens of self-employed clients across Sydney and Australia, I've learnt that the biggest challenge usually isn't affordability. It's finding a lender whose policy actually fits the client...it's often the difference between a loan that sails through and one that slowly unravels halfway through the process.

*Not financial advice