Westpac has announced a change to its home loan application process, easing documentation requirements for self-employed Australians. The policy shift reduces the need for two years of financial records to just one, bringing it closer to the process followed by salaried borrowers.
According to a report from Yahoo Finance, many financial institutions require self-employed applicants to submit extensive paperwork, including two years of individual and company tax returns, along with notices of assessment. In contrast, salaried employees often need to show only three months of payslips and bank statements.
“By introducing a one-year income assessment, we are making the home loan process faster and simpler by requiring less documentation, helping more self-employed Australians to secure their home or investment property sooner,” said James Hutton, managing director mortgages at Westpac.
“Additionally, reviewing just the latest year of income can help with providing a clearer representation of recent business performance and borrowing capacity.”
The change follows a 30% increase in home loan applications from sole traders. According to the Australian Bureau of Statistics, 15.7% of Australia’s workforce is self-employed.
Mortgage broker Marina Michael noted that lending policies have traditionally varied between banks. She explained that every lender needs at least two years of financials. Westpac’s adjustment aligns it with lenders like Commonwealth Bank and select non-bank institutions that already accept one-year financial data.
Self-employed individuals have long faced greater scrutiny when applying for loans. Hutton explained that their income is often “more variable, or require additional verification” compared to fixed wages, which contributes to stricter assessment standards.
Research by Great Southern Bank found that 40% of small business owners believe securing a home loan is more difficult for them than for salaried applicants. Key barriers included being deemed high-risk, difficulties gathering required documents, and income instability.
Frank Farrelly, a self-employed dentist in Sydney, told Yahoo Finance he was recently denied a home loan despite having significant savings and a partner with a stable income. “Staff wages have gone up, costs of everything else have gone up, but it’s also everyone feeling the pinch, so it’s hard for us to justify price rises,” he said. “Business conditions are poor, which I think is across the economy in general.”
Westpac’s move comes amid a rise in business closures. The Australian Securities and Investments Commission reported 14,105 business insolvencies in 2024–25, a 26.8% increase from the previous year.
“Cost increases – rents, insurance, interest rates, wages, electricity, and gas – weaker consumer demand, especially in discretionary areas and the ATO’s renewed collections activity are the key themes,” said Ivan Colhoun, chief economist at CreditorWatch.
Some lenders offer low-documentation loans, though these may carry higher rates and fees.
