Self-Employed Refinancing

Lenders assess your net profit after business expenses, not gross revenue. For a $400,000 refinance at 80% LVR, most lenders look for net assessable income of $65,000–$75,000 per year depending on other debts and dependants. That’s roughly $5,400–$6,200 per month after tax. If your business shows $90,000 gross profit but $30,000 in deductions, your assessable income is $60,000 — some lenders will add back depreciation and one-off costs to lift that figure. Andy calculates your serviceability using the same method the lender’s credit team will, so there’s no surprise at assessment.

Yes. Lenders require an active ABN (Australian Business Number) that matches your tax returns or BAS statements. If you’re a sole trader, your ABN should show continuous trading for at least 12–24 months depending on whether you’re applying full doc or low doc. Company directors need an ABN for the company and evidence that you’re an active director (ASIC extract). Contractors without an ABN are usually assessed as PAYG employees, not self-employed, which changes the documentation but can sometimes simplify serviceability.

Yes, using low doc refinancing. Specialist lenders accept an accountant’s declaration covering your most recent 12 months of trading, plus BAS statements and bank statements showing turnover, even when your FY23 or FY24 return isn’t lodged with the ATO. You’ll pay a 0.3%–0.8% rate premium compared to full doc, but you don’t have to wait 4–8 months for your accountant to finalise and lodge. If your profit trend is steady and you’re refinancing at or below 80% LVR, low doc approval is typically faster than full doc.

A low doc accountant’s declaration is a signed letter on your accountant’s letterhead confirming your business income over the last 12–24 months. It must state your name, ABN, trading period, and net assessable income (the figure the lender will use for serviceability). Some lenders require the accountant to hold a CPA, CA, or IPA membership; others accept any registered tax agent. The letter should be dated within 90 days of lodgement. Andy provides a template your accountant can follow so nothing is missed.

Some will, some won’t. Most specialist lenders add your director salary plus franked dividends to calculate total income. A few also accept a percentage of retained company profit (typically 50%) if it’s available for distribution and not quarantined for business operations. Major banks are stricter: they usually assess only salary plus declared dividends, which can limit serviceability if your accountant minimises distributions for tax reasons. Andy knows which lenders accept retained profit and structures the application to maximise what’s assessable.

Sole traders are assessed on net profit from the latest tax return (total income minus allowable business expenses). Lenders typically average the last two years, and some allow add-backs for depreciation, home office, and vehicle costs if they’re non-cash deductions. Company directors are assessed on salary plus dividends; some lenders gross up franked dividends by the franking credit (30%) to reflect pre-tax income. If you’re both a director and a shareholder, the lender looks at what you actually received (salary, dividends, director fees) rather than the company’s total profit. The structure that gives you the best serviceability depends on how your accountant has set things up; Andy runs both scenarios and recommends the lender whose policy favours your arrangement.

Low doc lenders accept 12–18 months of trading history, provided your current home loan is performing (no missed payments in the last 12 months) and you’re refinancing at 80% LVR or below. You’ll need 12 months of BAS statements, business bank statements, and an accountant’s declaration. Full doc lenders generally require 24 months lodged with the ATO. If you’ve been self-employed for 15 months and your FY23 return is lodged but FY24 isn’t yet, low doc bridges the gap without waiting another nine months.

Yes. Lenders assess net profit, and a loss-making business won’t serviceability-test even if your personal income from other sources is strong. If your business made a loss in one of the last two years due to a one-off event (equipment purchase, COVID shutdown, industry downturn), some lenders will average across two years or exclude the loss year if the current year shows recovery. Andy reviews your P&L and explains which lenders accept what; if your trend is upward and the latest 12 months are profitable, there’s usually a path.

Refinancing for a better rate (rate-and-term refinancing) keeps your loan balance the same; you’re switching lenders to cut your interest cost or access better features. Refinancing to release equity (cash-out refinancing) increases your loan balance to withdraw funds, typically for business investment, home improvements, or debt consolidation. Both require the same financial documentation (tax returns or accountant’s declaration), but cash-out refinancing is assessed at a higher debt-to-income ratio because your loan is growing. Most lenders cap cash-out refinancing at 80% LVR for self-employed borrowers, and some limit the withdrawal to $50,000–$150,000 depending on your income and the purpose. Andy structures both; if you want equity and a better rate, he combines them in one application.

Full doc self-employed refinancing typically takes 4–6 weeks from lodgement to settlement. Low doc refinancing is faster: 3–4 weeks. The longer timeframe compared to PAYG refinancing is due to manual credit assessment of your business financials, valuation scheduling, and discharge coordination with your current lender. If you’re refinancing in Mandurah, Baldivis, or Rockingham and the valuer is busy, add 3–5 business days. Andy lodges as soon as your docs are ready and follows up weekly so nothing sits idle.