Self-Employed and Knocked Back Twice — Then Approved for $480,000
Dan was a Perth electrician with 4 years ABN history who'd been declined twice. Here's how an alt-doc lender got him approved and settled in 5 weeks.
Dan runs a successful electrical contracting business in Perth — four years operating, consistent work, and strong turnover. He had a good deposit saved, no bad credit history, and a clear picture of what he wanted to buy.
Two banks had already said no.
The frustrating part: he wasn’t doing anything wrong. His taxable income was legitimately reduced by business deductions — tools, vehicles, subcontractors. When the banks looked at his tax returns, they saw a lower income figure than what he was actually generating, and knocked him back on serviceability grounds.
This is one of the most common situations we see with self-employed borrowers. The tax system works against you at the loan assessment stage.
Why Standard Lenders Struggle With Self-Employment
Most major banks assess borrowing capacity using your taxable income from the last two years of tax returns, averaged. For sole traders and business owners who legitimately minimise tax through deductions, this figure is often well below their actual cash flow.
Some lenders allow add-backs for certain deductions (depreciation, one-off expenses), but the process is manual, inconsistent, and the major banks rarely apply it generously.
Dan’s tax returns showed an income that suggested he couldn’t comfortably service a $480,000 loan. His actual BAS figures told a very different story.
The Approach
We needed a lender that would assess income differently — and we knew exactly where to look.
A number of specialist and non-bank lenders offer alt-doc home loans designed specifically for self-employed borrowers. Rather than relying on tax returns alone, they accept:
- 12 months of Business Activity Statements (BAS)
- 6 months of business bank statements
- An accountant’s letter confirming the nature and stability of the business
We selected a lender whose alt-doc policy matched Dan’s situation: over $80k annual GST turnover on BAS, consistent cash flow in the bank statements, and an accountant’s letter confirming his income and business status.
We prepared the application carefully — presenting his income story clearly, explaining the deduction structure, and making the case for serviceability using the lender’s preferred methodology.
The Result
| Previous applications | 2 declines (major banks) |
| Approved loan amount | $480,000 |
| Rate vs standard variable | +0.15% |
| Time to settlement | 5 weeks |
| Location purchased | Canning Vale |
The rate premium for the alt-doc product was minimal — 0.15% above standard variable rates at the time. Over the life of the loan, this is a meaningful cost, but once Dan has 12–24 months of payments and his tax returns for the current trading year, he’ll have the option to refinance to a standard product at a better rate. We’ll review it with him when that time comes.
What Self-Employed Borrowers Should Know
Your taxable income is not your borrowing income. Lenders can be flexible about how they assess it — you just need the right lender and a broker who knows who to go to.
BAS history matters. Two or more years of consistent BAS lodgement significantly strengthens your application. If you’re thinking about buying in the next 12–18 months, lodging BAS regularly now is one of the most useful things you can do.
Declines don’t define you. Each lender has their own credit policy. A decline from one doesn’t mean you can’t borrow — it means that lender’s policy didn’t suit your situation. We access a panel that includes specialist lenders for exactly these cases.
Names and some details changed for privacy. Outcomes reflect this client’s specific circumstances.