Banks have long treated finance for self-employed Australians with an extreme sense of caution, but the good news is that it’s not impossible to get approved.

From freelance writers, to tradesmen and even lawyers, self-employment can provide a great deal of job flexibility and autonomy – after all, you’re the boss. However, prospective lenders tend to view this with a greater degree of employment risk and often have serious concerns with income volatility.

When it comes to mortgages and personal loans, sourcing finance for self-employed Aussies has proven to be difficult in the past for many. According to the Australia Bureau of Statistics, more than 60% of small businesses cease operations entirely within their first three years of trading. This is one of the primary reasons as to why obtaining finance as a sole trader can considered to be risky business from the view of many lending providers. Self-employed people may also struggle to prove their income and any assets owned, which only makes it harder to meet the standard lending criteria.

However, the good news is that it’s not all doom and gloom. Many banks and lending providers are considered to be more flexible than others, and there are many methods that self-employed prospects can deploy in order to obtain that illustrious pre approval status – so where do you start?

Five Tips On Getting Finance For Self-Employed Australians

If you’re self-employed and looking to get a loan, then you are usually required to provide a more in-depth paper trail when compared to the average applicant. Mistakes can arise when dealing with inexperienced employees, complex applications, and even assumptions surrounding the information you provide. If you want to get approved on the “first go”, here are a few key insights to pay attention to in order to avoid any potential disappointment.

Timing Is Everything – To get approved for a home loan, most lending providers require self-employed applicants to have at least two to three years of earnings under their belt from this type of working status, purely to ensure your income is stable and established. However, some will consider applicants who have been self-employed for as little as one year, provided they have previously worked in the same industry or sector prior to striking out on their own.

Be Transparent – One of the primary hurdles to overcome when it comes to finding finance for self-employed applicants is proving their status as a good loan applicant, or in other words, attempting to ditch the “risk” factor. Applicants can do this by providing personal and business income tax returns for the previous two years at a minimum, along with the profit and loss statements derived from their business. Above all else, lenders want to see consistency, so be clear on the numbers.

Improve Your Cash Flow – The status of a brand’s cash flow is often a key indicator when it comes to assessing the overall health of a brand, enterprise or business. Paying off any outstanding debts such as credit cards or personal loans will positively impact your cash flow – and potentially your personal credit score – which can also enable you to qualify for a higher loan amount with some lenders.

Boost Your Deposit – Like any standard home loan applicant, the bigger the deposit, the better. Even as a self-employed sole trader or entity, a larger deposit shows the lender that you’re a lower-risk borrower, financially disciplined, and committed to the long game when it comes to managing your finances. A larger deposit can also give applicants access to more favourable terms such as lower interest rates.

Deploy A Financial Planner – One of the best ways of getting a preapproval as a self-employed applicant is to enlist the services of a fully qualified professional. More often than not, if you’re dealing directly with a bank, your application will be handled by a staff member that doesn’t specialise in self-employed loan options or products. The services of a financial planner or adviser can be a game changer when it comes to setting you up as a favourable candidate.

Sourcing Financial Advice If You’re Self Employed

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd are ready and waiting.

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. After working with a broad variety of clients in relation their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

As a result, Madd Life came to being in late 2019. Madd clients come from all walks of life, including the self-employed. George and the team are now fully able to support, and in turn kickstart, all their client’s financial goals by giving tangible real world advice and a plan of attack as to how to get there.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions, or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

While getting pre-approved sure is exciting stuff, there’s no bigger buzzkill than forgetting to budget for the home loan fees that come with a mortgage.

With the ever-rising cost of living, saving for a home loan in this day and age can be tough – so it comes as no surprise that once a buyer finally gets their hands on a pre-approval, it’s something worth celebrating. Many, however, fall into the trap of forgetting about all of the other non-negotiables involved with buying a house, so it’s important to set aside an area of your budget for home loan fees in order to avoid any nasty surprises.

While some of these fees (like stamp duty) seem like the obvious ones, as with everything in the world of finance: the devil is in the details. Even real estate veterans onto their third or fourth investment property can easily forget about insurance and even body corporate fees, which can all quickly add up – so what do upcoming homeowners need to account for?

Breaking Down Home Loan Fees

Whether you’re a first home buyer or making the moves to get an investment property, there are generally a few non negotiables to account for when it comes to home loan fees. While many are required to be paid up front, there are also a medley of other ongoing fees on top of your weekly, fortnightly or monthly mortgage repayment.

When it comes to accounting for upfront home loan fees (which need to be paid before you can get your hands on the keys) a few of the major ones include the following –

Lenders Mortgage Insurance – If you haven’t saved the full 20% deposit for your loan, then LMI is a necessary evil. This fee is compulsory and is designed to protect the banks if you were to default on the loan. Calculated on a sliding scale, an example of this is that if you were looking at a property for $500,000 with a 10% deposit ($50,000) – expect your LMI to be $8,000 on top of required loan. While it sounds like a lot, and is usually the first of many home loan fees that makes borrowers shiver, it also helps buyers with as little as 5% to get into the market faster.

Stamp Duty – Another non-negotiable, stamp duty is a state government tax issued on all property purchases in Australia. The good news is that if you are a first home buyer and living in the property in Queensland, expect concessions. The bad news is that if this is your second or third home, expect to pay around $8750 on a $500,000 home in Brisbane. This dollar amount depends on the property’s value, so it can fluctuate. However, some states offer a reduced rate on newly built homes, regardless of whether you’re buying your first home or your fifteenth.

Government Fees – This one is essentially all about registering with the Queensland Government. The three major ones include Registration Of Mortgage ($187), Registration Of Discharge On Mortgage ($187), and Registration Of Transfer (Property Title). These can range from a few hundred dollars to a few thousand dollars, depending on the value of your property. They also differ greatly depending on your state, and an example of this is Registration Of Transfer fees which from range $137 in the Northern Territory to $2901 in South Australia.

Legal Costs – You’re going to need the assistance of a solicitor, legal professional or conveyancer to make a strata report, conduct title searches, or to review a contract. The latter isn’t an essential requirement in Queensland as we have standardised terms and conditions, with the costs generally ranging between $1000 to $2000 depending on how complex the transaction is. While enlisting the services of a legal professional isn’t a binding requirement, signing a contract of sale without one can land you in hot water should things go south.

Building And Pest Inspections – This is considered to be the big one when it comes to home loan fees, as the inspection can help to spot minor or major structural repairs in the property in question. You need to protect yourself against any potential issues that may be invisible from the outside, along with any hazardous pest or termite infestations. When combined, these are usually between $500-$700 in Queensland. While not a legal requirement, the majority of property owners in Australia conduct these searches prior to settlement.

Bank Fees – Although you might have your application fee waived, there are also other costs to consider like evaluation fees, settlement fees, and legal fees that may be hidden in the fine print. Many lending providers will also charge customers ongoing monthly fees, so be sure to account for those in your new budget once you’re settled into your new property. Unlike Madd Loans, not all mortgage brokers offer a fee free service, so ensure you shop around for the best fit for your circumstances.

RealEstate.com.au estimates that when obtaining a mortgage for a $500,000 property in Queensland, it’s not unreasonable to pay between $12,000 to $25,000 in fees on top of your interest rate. The key here is to make sure that you’re aware of the costs that come with any mortgage, to ensure that there are no unexpected surprises.

The above are considered to be the “big” home loan fees to watch out for, but that doesn’t mean that the buck stops there. Be sure to factor in other variables like removalist and moving costs, council water and land rates, body corporate fees, insurance premiums and other ongoing bills that affect just about every home owner in Australia.

Understanding Home Loan Fees With The Professionals

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. After working with a broad variety of clients in relation their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

As a result, Madd Life came to being in late 2019. Madd clients come from all walks of life, including the self-employed. George and the team are now fully able to support and in turn kickstart all of their client’s financial goals, by giving tangible real world advice and a plan of attack as to how to get there.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality

While the technology that gave us “Tap And Go” has no doubt changed our spending habits, can using paypass affect owning a home? The answer isn’t that simple.

In 2021, just about all new credit or debit cards will be issued with either Visa payWave or MasterCard PayPass. Also known as “Tap And Go”, it was designed as a simple way of purchasing items under $100 in person. Users can either tap or hover their credit card up to four centimetres away from the EFTPOS terminal, and the transaction is processed without a pin or a signature. Many retailers have embraced this payment method as a means to cut down on processing times and cash handling.

Visa payWave and MasterCard PayPass credit cards allow you to “tap and go” due to the embedded near-field communication (NFC) chip, which transmits your information to the POS terminal. There is also a radio antenna embedded into the credit card that sends radio frequencies, allowing contactless payments. However, many of us tend to get over excited about new technology and haven’t been paying attention to how much it’s actually costing us.

Why Paypass Costs More Than Other Transactions 

Contactless card payments (like payWave or payPass) cost businesses a lot of money. The Australian Retailers Association estimates banks charge businesses around $500 million every year to process card transactions.

Fees for tap-and-go are about four times higher than EFTPOS and add about 40¢ to a $100 transaction for a retailer or merchant, as the transaction fees treat “Tap And Go” purchases like a credit card, as opposed to a debit card. Businesses then pass on the extra costs to consumers either through by increasing the cost of goods across the store, or via surcharges.

Some major merchants like Coles and Woolworths simply absorbed the cost of processing into their business, but others like Aldi and Westfield Car Parks charged anywhere from 0.5% – 2.5% on credit transactions – including contactless “Tap And Go” payments. Many users simply don’t realise that this method incurs the surcharges that apply to credit cards, and as a result often pay more on their transactions simply because they don’t know any better.

Can Paypass Affect Owning A Home?

Many new and existing users of this modern form of payment have been left wondering – can paypass affect owning a home? Well, the answer is both yes and no. While Paypass itself isn’t the reason why home loans can get knocked back, it’s what you’re using Paypass for that can be linked to a declined mortgage application.

The spending habits of potential borrowers indicate to banks and lending providers what type of lifestyle you lead. Once upon a time, lenders previously assessed a borrower’s capacity to meet a mortgage based on a general household income equation. However, these days they are now looking at up to six months’ worth of bank, transaction and credit card statements – including every single “Tap And Go” purchase you make. It is a near forensic examination of your spending habits, particularly if you use this payment method for lots of regular, erratic purchases. Yes, that includes your weekly UberEats delivery.

So, can Paypass effect owning a home? No, so long as you use it wisely. The magic lies in your mindset. Start living as if you already have a mortgage, and a property to pay for – that means budgets, curbing frivolous spending, and being able to show that you’re a good candidate for a loan to lending providers.

Sourcing Help With Mortgage Solutions

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting.

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.

At some point, we all need a vacation – but we shouldn’t be going into the red for one, so here’s seven debt free holiday tips to keep your bank account happy.

A break from the “real” world, cocktails, better weather, sleep-ins, exploring: it’s no wonder that the vast majority of us quite literally count down the days until our next holiday. However, there’s nothing worse than arriving back home with a financial hangover, and a swift reality check that you may have gotten into debt by jetting off on a vacation. After all, your day to day financial obligations didn’t take a holiday – you did. 

Seven Tips On Avoiding A Post-Holiday Financial Hangover 

The good news is that if you wish to avoid biting off more than you can chew in terms of paying your bills after a siesta, we have a broad variety of debt free holiday tips that you can deploy in order to keep your budget and bank account happy – and they often all boil down to simply planning ahead. 

Start Saving – While it seems like a no brainer, try not to spend money that you don’t have – this also goes for having an “emergency fund” should things go south on your trip. A popular saving method is by opening a dedicated bank account that you aren’t able to transfer easily from.  

Get Extra Income – Depending on your own personal circumstances, sometimes it’s actually easier to generate more income as opposed to saving it. If you know you’re heading abroad in six months, start that side hustle, pick up extra shifts or even try Airtasker to chase extra cash. 

Shop Around – Don’t book anything on a whim, especially when it comes to flights, hotels or tour packages. Even for domestic trips, tourism is a competitive market, so don’t be afraid to shop around and do your research in order to get the best possible deal. 

Fly Mid Week – If you’re not a fan of using travel agents or are confident in your bargain hunting ability regarding booking your own flights, it’s an unspoken rule that flights are often cheaper if you opt for the midweek options, particularly in regards to very early or very late flights. 

Eat In – Depending on your destination, the cost of eating out is the enemy of any debt free holiday tips – it quite simply just all adds up. Try to have food at home first thing in the morning, or capitalise on that hotel buffet breakfast – it could save you hundreds of dollars. 

Watch Your Data – When it comes to post-holiday money blues, a surprise phone bill from an overseas trip is often one of the worst offenders. If you’re abroad, switch your phone’s data off to avoid roaming charges or instead buy a local sim card if you need access to the internet. 

Get Insurance – Considering the era that we currently live in, it’s never been more important to ensure that you’re covered in the event of any unforeseen events. Even if it’s to cover yourself for a simple flight cancellation, make sure you get insurance after you’ve read the fine print. 

Sourcing Further Financial Tips From The Professionals 

If you are ready to “level up” and get financially fit, then it’s never too early to seek professional financial advice. Whether your next goal is to retire early, take a gap year or purchase a home, George Samios and the team at Madd Life are ready and waiting – even if it’s just for further debt free holiday tips. 

With their entire business built on referrals, the team at Madd Loans have taken the mortgage broking industry by storm. Their overwhelmingly positive feedback has helped them to take out numerous industry awards, including the title of “Queensland’s Broker Of The Year” for four consecutive years. However, after working with a broad variety of clients in regards to their mortgage options, it made sense for the team at Madd to have the capacity to offer a full financial planning service.

If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.