The banking giant has introduced a significant change to its home loan application process, which will bring it in line with the requirements of salaried borrowers.
According to a report from Yahoo Finance, many financial institutions require self-employed applicants to submit extensive paperwork, including two years of individual and company tax returns, along with notices of assessment. In contrast, salaried employees often need to show only three months of payslips and bank statements.
- Extensive paperwork requirements
- Two years of individual and company tax returns
- Notices of assessment
Westpac has announced that it will now accept one year of financial data for self-employed applicants, reducing the need for documentation and making the home loan process faster and simpler.
“By introducing a one-year income assessment, we are making the home loan process faster and simpler by requiring less documentation, helping more self-employed Australians to secure their home or investment property sooner,” said James Hutton, managing director mortgages at Westpac.
The change follows a 30% increase in home loan applications from sole traders. According to the Australian Bureau of Statistics, 15.7% of Australia’s workforce is self-employed.
| Key Statistics | Self-Employed Workforce | Home Loan Applications |
|---|---|---|
| 15.7% of Australia’s workforce is self-employed | 30% increase in home loan applications from sole traders |
Mortgage broker Marina Michael noted that lending policies have traditionally varied between banks. She explained that every lender needs at least two years of financials. Westpac’s adjustment aligns it with lenders like Commonwealth Bank and select non-bank institutions that already accept one-year financial data.
Research by Great Southern Bank found that 40% of small business owners believe securing a home loan is more difficult for them than for salaried applicants. Key barriers included being deemed high-risk, difficulties gathering required documents, and income instability.
- Definition of Self-Employed
- A self-employed individual is someone who runs their own business and is responsible for its financial management.
Frank Farrelly, a self-employed dentist in Sydney, shared his experience of being recently denied a home loan despite having significant savings and a partner with a stable income. “Staff wages have gone up, costs of everything else have gone up, but it’s also everyone feeling the pinch, so it’s hard for us to justify price rises,” he said. “Business conditions are poor, which I think is across the economy in general.”
The policy shift is expected to make a positive impact on the lives of many self-employed Australians, allowing them to secure their home or investment property sooner.
