How Lenders Read Self-Employed Income

How lenders read self-employed income

One applicant. One set of financials. Five lenders, assessed at the same time.

Lender A

$1.67m

Lender B

$1.66m

Lender C

$1.58m

Lender D

$1.30m

Lender E

$1.18m

$490.000

between the highest answer and the lowest. Nobody made a mistake. Each lender has a different policy for reading the same file.

You know your numbers. The bank works from your tax returns.

The picture inside those returns can be a year behind the business you’re standing in. Sometimes two. What separates lenders is what they do with them: what gets stripped out, what gets added back, whether growth is capped, and whether two years are averaged or only the most recent one is used.

This guide explains how that number gets built, and where the room usually is.

What lenders start from, and why turnover isn't it
Add-backs, and where lenders disagree with each other
The three ways two years of returns get read
Company and trust income, and what actually counts as yours
Business debt that gets counted twice
What to do when the financials aren't ready

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Same financials, five lenders, and around $490,000 between the highest answer and the lowest. This guide explains what lenders count, what they add back, and where the differences show up.

How Lenders Read Self-Employed Income

Same financials, five lenders, and around $490,000 between the highest answer and the lowest. This guide explains what lenders count, what they add back, and where the differences show up.

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Broking since 2006 · 1,000+ loans · $700M+ written

This guide is general information only. It has been prepared without regard to your objectives, financial situation or needs, and it is not credit advice specific to any person, tax advice, or financial product advice. Examples are real client scenarios that have been anonymised. Outcomes depend on individual circumstances, lender policy and credit assessment at the time. Lending criteria, add-back treatment and income assessment policies vary between lenders and change without notice.

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