Case study: self-employed tradesman approved for $780,000

The situation

A builder operating through a company for four years, with two full years of financials and a consistent client base. His accountant had done a good job minimising tax — which had made his home loan application look weak.

His own bank had offered $520,000 based purely on the taxable income figure on his returns.

The challenge

• Taxable income understated actual cash flow substantially
• Income had grown 22% year on year, so a two-year average would penalise him
• Company and personal returns needed to be read together
• Some lenders average two years, others use the most recent year if it's lower

What we did

We worked through the financials with his accountant and identified legitimate add-backs: depreciation of $18,400, one-off equipment write-offs of $14,200, interest on business debt being refinanced of $6,800, additional superannuation contributions above the mandatory rate of $9,600, and retained company profit of $3,200.

That took assessable income from $96,200 to $148,400. We then placed the application with a lender that uses the most recent year's figures where income is trending upward and the business is established, rather than averaging two years and dragging the assessment down.

The outcome

• $780,000 approved — $260,000 more than his own bank offered
• Standard bank pricing, not a low-doc or specialist rate
• Assessed on the most recent year rather than a two-year average
• Full offset account and unlimited extra repayments included

What self-employed borrowers should prepare

• Two years of company and personal tax returns plus financials
• Most recent BAS statements and a current ATO portal position
• An accountant who will confirm the add-backs in writing
• Clean business and personal transaction accounts for six months
• No new equipment finance in the months before applying