Common Mistakes Self-Employed

Borrowers Make

Self-employed borrowers often face challenges that don’t apply to PAYG applicants. Many issues arise not because of income levels, but because of timing, preparation, or assumptions about how the process works.

This page highlights common misunderstandings and avoidable mistakes to help self-employed borrowers approach the home loan process with clearer expectations — before any formal credit discussions take place.

Assuming strong business performance guarantees an outcome

A common misconception is that a profitable business automatically leads to approval.

In reality, lenders usually look at:

  • Income consistency over time
  • How income is structured and distributed
  • Business sustainability

Strong performance is important, but it’s only one part of a broader assessment.


Applying too early

Timing matters.

Some borrowers begin formal conversations before:

  • Financials are up to date
  • Income trends are clear
  • Documentation is organised

Starting too early can lead to unnecessary delays or confusion. Understanding the process and preparing first often leads to smoother conversations later.


Assuming all lenders assess income the same way

There is no single, standard approach to assessing self-employed income.

Assessment methods can vary based on:

  • Business structure
  • Industry type
  • Internal lender policies

This variation is one reason outcomes can differ and why preparation and understanding are important before moving forward.


Not understanding how expenses and add-backs are treated

Business expenses, reinvestment, and add-backs can affect how income is viewed.

Without a general understanding of how these factors are considered, borrowers may be surprised by:

  • How income is calculated
  • Why figures differ from expectations

Education helps reduce surprises — even though final assessment is always personalised.


Rushing documentation

Incomplete or inconsistent documentation is a common source of delays.

Common issues include:

  • Missing reports
  • Inconsistent figures across documents
  • Unclear business structures
  • Being organised doesn’t require perfection — but clarity helps.


Expecting education to replace advice

Educational content can help with understanding and preparation, but it does not replace:

  • Personalised credit advice
  • Formal assessment
  • Lender decision-making

Recognising when education ends and licensed advice begins is an important step.


Learning before moving forward

Understanding common pitfalls can help self-employed borrowers:

  • Set realistic expectations
  • Prepare more effectively
  • Have more productive conversations with licensed professionals

Education doesn’t guarantee an outcome — but it can reduce uncertainty and confusion.


Continue learning

If you’d like to explore the broader process or understand how to prepare:

Prefer to keep learning first?
Explore our self-employed home loan education