Buying Strata When Self-Employed: What Not to Do

Buying a strata property is a very different process when your income comes from your own business. The lender looks at two things: how your income is documented, and the property you want to buy. Getting both ready before you make an offer is the most useful thing you can do.

This article covers the missteps we see self-employed buyers across Victoria make with a strata home loan, and how to avoid them.

Why Do Strata Purchases Need Extra Care?

A strata purchase has more moving parts than a standalone house, because you own your lot and share ownership of common areas through an owners corporation. In Victoria, that body charges fees and manages the building. Those costs sit on top of your loan repayments, so they belong in your budget from day one.

Lenders also assess the property itself, not only you. Policies on apartments and units differ between lenders, so a property one lender is comfortable with may be handled differently by another. A broker can compare lenders for you and show you where a particular property fits, which is one reason to speak with us before you commit.

Don't Make an Offer Before Home Loan Pre-Approval

Getting home loan pre-approval before you make an offer lets you search with a clear budget. It is also a chance to find out how a lender views your income before a contract is on the line.

Pre-approval is not a final approval. The lender still values the property and reviews the contract, so the property needs to pass as well. It also lapses after a set period, which varies by lender, so timing matters. If you are still some way from buying, ask us how long your pre-approval will last.

A pre-approval also gives you a realistic loan amount. You can test your numbers on our borrowing capacity page before you start inspecting.

Don't Assume Your Tax Return Tells the Whole Story

Lenders generally assess self-employed income using your tax returns and business financials, so the profit you report matters. If you have used deductions to reduce taxable income, your assessable income may be lower than your real cash flow. Speak to your accountant before applying about how your income will appear to a lender. Any tax decision should be made with their advice, not based on a lending goal alone.

If your paperwork is not up to date or your income has changed recently, there may be other paths. Our low doc loans page explains an alternative for some self-employed borrowers. These loans can come with a higher interest rate and a larger deposit requirement, depending on the lender, so they suit particular situations rather than every buyer.

An Example: Planning for Strata Costs and Repayments

Budget for the loan repayment and the owners corporation fees together, then check whether your business income can carry both through a quieter period. The figures below are illustrative only.

Consider a self-employed graphic designer who wants to buy a unit. Her accountant has her returns and business financials ready, and she borrows $500,000 on an owner occupied home loan. Using the illustrative rate of 6.75% p.a., a 30-year principal and interest loan would cost about $3,243 a month. An interest-only loan at the same rate would cost about $2,813 a month, but only for the interest-only period. After that, repayments rise because the principal must be repaid over the shorter remaining term, and she would not be reducing the loan in the meantime.

She decides on principal and interest, because building equity matters more to her than the lower early repayments. She also asks her broker about a linked offset account, so spare cash from a strong trading month can reduce the interest charged on the loan. The trade-off is that offset accounts can come with a higher rate or an annual fee, depending on the lender, and the benefit only applies to the balance she actually keeps there.

She then adds the owners corporation fees to her monthly budget and checks the total against her slowest trading months. The outcome is a pre-approval she is comfortable with, and a clear budget when she inspects properties. You can run your own numbers on our mortgage repayment calculator.

Fixed, Variable or Split: Which Rate Suits a Self-Employed Buyer?

The right rate structure depends on how steady your income is and how much flexibility you want. A variable rate can offer features like an offset account and extra repayments, while a fixed rate gives repayment certainty for a set period.

A split loan divides the balance between the two. This can suit a self-employed buyer who wants certainty on part of the loan and flexibility on the rest. The trade-off is that fixed portions can carry break costs if you repay early or refinance, and extra repayments on a fixed portion are often limited. Compare the features of each home loan product alongside the rate, not instead of it. Our home loans page outlines the options we can arrange.

Don't Overlook the Contract and Building Details

Before you sign, have your conveyancer or solicitor review the contract and the owners corporation documents. These can show what fees apply, whether major works are planned, and what the building has been spending on maintenance. A large unexpected levy can strain a self-employed budget, so it is worth knowing what is coming.

If the lender raises a query about the property, tell us early. We can often work out options with you before it affects your settlement timeline.

Talk to a Broker Who Understands Self-Employed Income

We work with self-employed borrowers and compare options across our lender panel, so you can see what is available for your situation. Call one of our team or book an appointment at a time that works for you, and we will help you plan your strata purchase before you make an offer.

Frequently Asked Questions