Our self-employed policies set us apart in market

Using most recent years income for self-employed customers

Remember we’re now able to accept self-employed client’s most recent years income for assessment – instead of the past two years – where this is a sustainable reflection of future performance.

The good news is, you’ll only need to provide simple commentary to evidence your selection of the most recent year option. You don’t need to provide BAS or other documentation to meet policy requirements.

What you need to do

1. Obtain two years financial statements as per our current policy requirements.
2. Key into the lodgement system the financials that are a sustainable reflection of future servicing ability, using either:
   • The last two years’ financial information as you currently do; or
   • The most recent year’s income. In this instance, please capture only the most recent year’s financial data in both columns of the lodgement system.
3. If the most recent year’s income is being used, you will also need to record commentary outlining:
   • The change or event that has occurred resulting in the most recent year being more appropriate and ongoing into the future.
   • Advise where the change is evident in the financial statements (e.g. increase to gross income).

Simplified self-employed assessment

Client prepared financial statements are acceptable for companies and trusts for the most recent year, where accompanied by accountant prepared financial statements for the year prior, where we can clearly confirm income for the applicants.

For self-employed clients with businesses that were affected and have recovered from the impacts of COVID-19, Job Keeper and the once-off cash flow boost are counted as income.

It’s easy to verify income received by Directors where their PAYG income demonstrates their ability to service the requested loan. The income paid can be input into the PAYG field in the lodgement system and the Serviceability Calculator. All you need to do is collect the following customer documents:

• Two consecutive years of individual tax returns showing the PAYG wage in Salary/ Wages, and
• The most recent notice of assessment to confirm lodgement to the ATO.

Trust distributions

We can consider adding back distributions to the trustee from non-applicants, even adults, with a small amount of additional commentary, speak to your BDM to get more detail before submitting.

If you have a client that fits any of the above criteria, chat with your Connective Essentials BDM to workshop scenarios.  For full policy details refer to the Credit Guidelines booklet available in Mercury.