Refinancing Guide for the Self-Employed

By Angela Monroe - January 24, 2020

Over 2 million Australians are currently self-employed, yet there can still sometimes be a lengthy process when it comes to refinancing with many lenders preferring applicants in full-time salaried employment. 

In fact, since the Global Financial Crisis, many lenders have increased their documentation requirements which can make it harder for self-employed applicants to refinance. It can be particularly frustrating for self-employed workers who have a substantial income but are still considered to have bad credit due to the nature of their work.

Lender Requirements

When it comes to getting help for people with bad credit, you first want to understand what it is that lenders actually want. In short, they are keen to get as much reassurance as possible that the loan will be paid back – in full and on time.

With a refinancing, lenders will often ask for:

  • Evidence of a minimum of 2 year’s income (this will increase if the most recent year is lower than the previous year)
  • Personal tax returns
  • Business tax returns
  • Financial statements

Top Tips for Refinancing

Help for people with bad credit is available, yet there are lots of things that you can do to help yourself be in the best possible situation before you start the refinancing process.

  • Prepare all your documentation of income in advance: lenders usually require evidence of regular payslips or a fixed salary entering your bank account each month. Most self-employed car or homeowners will not have this available so you need to make sure that all your documentation such as bank statements and tax records are prepared and ready to be shown when required.
  • Consider increasing your deposit: You may have good cash flow but still have bad credit due to the fact that you don’t have a set salary and are currently self-employed. If you are able to increase your deposit or offer a larger down payment, you could seriously increase your refinancing options. A larger down payment often means the lender is willing to lend more money – and you’ll have less to pay back long term. If you don’t have the money for a larger deposit, think about whether you can delay your refinancing for a few months until you have saved a bit extra.
  • Show your track record: Gather together all evidence you can of a steady and stable track record of successful self-employment – this should ideally show regular work and a strong income. You could also offer lenders the reassurance of evidence of any loans that you have paid back in full to show that you are a responsible borrower.
  • Check your credit score: always check your credit score is as strong as possible before you apply for refinancing. Help for people with bad credit is available and there are lots of ways that you can quickly and effectively improve your credit score. You should also double-check your credit record for any errors that may be on there – you can dispute these and request reporting agencies to change these if found to be incorrect.
  • Keep a backup of cash: don’t put all your money into a refinancing loan. You don’t want to stretch yourself financially, however keen you are to refinance. Make sure that you still have a backup of cash – this will help to give you a bit of a safety net if the worst comes to the worst and you have a few months with less work coming in. You don’t want to risk missing repayments on any loan for fear of damaging your credit rating further.

Get Expert Help

At Loans for People with Bad Credit, we understand how frustrating it can be for self-employed people looking to refinance. We believe that everyone deserves a chance to access the best loans for them and we’ll work with you to understand your current financial situation.

Finding the right lender can make a huge difference if you have bad credit.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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