Self-employed? Here’s how you could save up to $1,680 on your mortgage
A non-bank lender announces deep cuts to interest rates for self-employed borrowers, slashing up to 0.5% off the interest rate for residential loans.
As we emerge from the pandemic and the economy rebounds, Resimac aims to support self-employed home loan borrowers who require alternative methods of income verification, whether they are keen to buy their own home or an investment property.
The rate reduction brings interest rates for Resimac's Prime Alt Doc product down to 3.47% p.a. (comparison rate 3.51%) for borrowers with at least a 30% deposit. For self-employed home buyers or refinancers with a smaller deposit of between 20-30%, the mortgage interest rate drops to 3.87% p.a. (comparison rate 3.91%).
This means that with a 30% deposit, a self-employed borrower trying to get finance for an average Australian home loan balance of around $494,000 would save $140 per month on their home loan repayments, or $1,680 per year.
Over a 30-year loan period, these savings could total $50,400.
With self-employed Australians and small businesses accounting for 44% of employment Australia-wide, according to the Australian Small Business and Family Enterprise Ombudsman, they are key to the economy's rebound in 2020, said Daniel Carde, Resimac general manager distribution.
"Small businesses are the backbone of the Australian economy, and we want to ensure they're supported during this critical phase with access to competitive loans that are tailored to meet their unique needs," Carde said.
"The self-employed… have been doing it tough for most of the year with the COVID-induced lockdowns and restrictions. But with almost every state and territory opening up its borders and easing restrictions, they are quickly recovering."
Other lenders are looking to assist self-employed home buyers and existing borrowers on the path to a post-COVID recovery, with options to refinance and consolidate debt to get into a better financial position.
One such lender is Aussie, which is currently offering a very competitive 2.99% interest rate to low-doc borrowers (3.02% comparison rate). The only catch is the loan LVR of 55%, meaning you need to have a deposit or equity of 45% of the property's value. Other rates are available from Aussie for those with smaller deposits.
Pepper Home Loans also has a low-doc loan available that caters to those with some negative listings on their credit file, as Pepper ignores defaults under $1,000. Interest rates for self-employed borrowers start at 3.85%.
To see how much you could save as a self-employed borrower, compare low-doc home loans now