Builders Finance – What Happens When You Don’t Qualify for Conventional Loans?

Builders Finance: Financing options that “get” tradies

One of the major problems tradies face when it comes to getting financing for anything is they don’t fall under the loan applicant standards of conventional loans. Builders finance companies in Sydney that understand, or “get” today’s tradies know the importance of supporting local tradesmen and business. They work with you to find the financing that will fit your situation and needs. That’s why it’s good that there isn’t any one financing solution designed for everyone.

Builders Finance: When regular banks won’t finance you

It’s very common for banks to reject conventional financing for tradies for a number of reasons. Their standards fit into a one-size fits all concept, whereas tradies aren’t the one-size types. They are the out-of-the box thinkers with successful businesses they have started and nurtured over the years. So, what standards don’t fit the banks’ standards for builders finance?

  • Documentation – When you have a job, you get some kind of proof of your income that you can show as consistent income to the banks. As a tradie, your income may not be so consistent and you don’t have the same kinds of documentation of your income banks want. This is the biggest issue for the self-employed local tradie.
  • Credit rules – Not all tradies fit into the conventional banking credit rules, making it difficult for them to obtain conventional financing.  That’s okay, because there are builders finance options from other resources where you can obtain financing even if you do not meet the standard bank requirements for mortgages and loans.

Builders Finance: Two non-conventional loan options

There are two basic types of loans that are used for tradies who don’t meet the conventional financing requirements.

  • Low Doc loans – Low doc loans are specifically designed for the self-employed. These are usually in the form of residential loans where the borrower cannot present tax returns as part of their income documentation. The documentation used for Low Doc loans includes BAS (Business Activity Statement) and/or bank statements or their accountant’s declaration. It depends on the lender as to what documentation is needed for specific loans.
  • Non-conforming loans – Non-conforming borrowers are those who are self-employed, have credit problems, have outstanding tax debt, have little to no deposit funds, fail to meet job stability requirements, are close to retirement age, have outstanding personal debt, have recently started a business, and/or have excessive credit applications on their record. New Australian residents and anyone who has been refused credit are also borrowers who may be able to take advantage of non-conforming loans.

Builders Finance: Be aware of what is needed for financing

Something tradies should understand about Builders finance solutions for unconventional financing still requires that you show some form of documentation that proves your income. Most lenders also expect you to present documentation of your business such as your business number registered with the government and other related documents before they will work with you.

While it may seem like a hassle to try to obtain financing when you are a self-employed tradesman, mortgage and finance brokers are experts at helping you find the financing you need. It doesn’t have to be a frustrating process as long as you have recommended Builders finance brokers on your side. We hope this information that we gathered for you will be helpful in your quest to expand your business, buy a home, or finance your next project.

If you do need a good Builders finance broker to help you with financing, try contacting a Builders finance broker from our Tradebusters Academy network. These finance and mortgage brokers specialise in helping tradesmen in business and we are sure one would be a good choice for you.

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