I recently had a client, let’s call him ‘Joey’ – and the first thing Joey said to me when he called me to discuss his needs was “you should know that I am self- employed, I know banks don’t really like lending to people if they are self-employed”.
Leah: “that’s Ok Joey, I do not find that to be the case and I use all the major banks and 36 others so let’s have a look at it for you”.
Joey had recently been to his local bank to find out if he could borrow money to purchase a new family home, but he had been told this wasn’t an option for him because he didn’t earn enough over the last financial year to service the new debt. Joey was disgruntled by this advice, as you can imagine – so he came to me for a second opinion.
I got to talking with Joey, I knew that if I wanted to understand his business financials, I would need to firstly understand his business and how it operates.
“Leah I’m really worried you won’t like what you see, the profit is only very small” Joey pointed to a small figure that definitely wouldn’t get him a loan. “That’s Ok Joey” I said “that is just a reflection of your company’s taxable income, but what about the company wages to you, and addbacks like deprecation and leases that the bank can add to your wages? Also these directors fees, are paid to you, and make your profit look small, but you personally received these!”.
Reading Joeys financials after taking the time to understand his business structure, meant I knew exactly what figures I could use for my serviceability assessment. I was able to get Joey pre-approval for a loan of $712,000 to upgrade his family home.
Reading financial statements can be daunting if you don’t know what you’re looking for. Thankfully, I have spent the last two years intensively training in self-employed applicants, and now understand various structures and flows of income, and how to present this to a lender to obtain approval successfully. This is a specialty of Wilson Financial and where we really shine.
Joey and his family have now purchased their beautiful new family home, and they even got to keep their existing home as an Investment property.
If you are self-employed and looking for a second opinion or want to talk to an expert about borrowing money – talk to Leah today!