Self employed people have always had a hard time borrowing money. Why? Because the banks see self employed customers as a higher risk than customers with a job that has a predictable income.
Banks assess business income by looking at the last two years tax returns, financial statements and other documents for both the business and the directors. Even if the director is applying for a home loan in their own name the bank will still need to see financials for the business or company just to make sure that the company upon which the director's income replies is running profitably.
In the past if you have had no financials then you have had no home loan!
There are many legitimate reasons why businesses may need a no financials loan.
In particular many companies and self employed people haven't got around to lodging their tax returns! As you can imaging doing the accounts & lodging a return of a business is much more difficult than it is for someone with a normal job to do their taxes.
Often businesses run at a higher profit than is shown on their tax returns. There are many legal tax minimization strategies such as distributing income to family members or deducting your depreciation expenses which are not a real day to day cost. If you are in this situation and your bank could only look at your tax returns then it would be very difficult to get a loan.
Thankfully, the banks have woken up and many now offer low doc loans. By signing an income declaration you effectively self-verify your income and the bank takes your word for it! Aside from the income declaration, no proof of your income is required!
Most lenders will still need to see a statement of your assets and liabilities and will still do a credit check as part of their credit assessment. With no doc loans you do not need to provide a statement of assets and liabilities at all!
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