Building a successful business takes focus. For many business owners, that means reinvesting in the company, managing cash flow and prioritising growth—while personal financial goals are pushed further down the list.
As a finance and mortgage broker, Fiona regularly works with business owners who have built successful businesses but continue to rent their home or commercial premises.
Renting can provide flexibility and may be the right strategic decision in many circumstances. But if property ownership is part of your longer-term plan, it may be worth understanding what your finance options actually look like.
Being self-employed doesn’t necessarily put property ownership out of reach.
Build wealth beyond your business
For many business owners, their company represents a significant proportion of their wealth.
Property ownership can provide an opportunity to build equity in an asset outside the business and potentially diversify your longer-term financial position.
With a home, each principal repayment contributes towards increasing your ownership of the property. With commercial premises, ownership may also provide a business with greater control over an important operational asset.
The right strategy will depend on your circumstances, but it can be worth considering how property fits within your broader financial goals.
Could buying your business premises make sense?
For established businesses, purchasing commercial property rather than continuing to lease can be worth exploring.
Owning your premises can potentially provide greater certainty over your location and reduce exposure to future lease changes. It can also allow you to build equity in a commercial asset over time.
However, buying isn’t automatically better than leasing.
The deposit, repayments, cash flow requirements and opportunity cost of using capital to purchase property all need to be considered. A suitable commercial property finance strategy should support the business rather than place unnecessary pressure on its cash flow.
Buying a home when you’re self-employed
Many business owners assume obtaining a home loan will be difficult because they’re self-employed.
While self-employed home loans can involve additional considerations, there are lenders that understand different business structures and income arrangements.
Depending on the lender and your circumstances, an assessment may consider factors such as your personal and business income, financial statements, tax returns, liabilities and the length of time you’ve been operating.
Different lenders can also assess self-employed income differently, which is why choosing an appropriate lender can be particularly important.
Create greater financial stability
Property ownership can also provide a degree of longer-term certainty.
For homeowners, this can mean having an asset outside the business and greater control over housing decisions. For businesses, owning commercial premises can reduce reliance on a third-party landlord and provide greater certainty around occupancy.
But property ownership comes with its own costs and responsibilities, so the decision should always be considered alongside your cash flow, business plans and broader financial strategy.
Start by understanding what’s possible
Buying a home or commercial property won’t be the right decision for every business owner, and timing matters.
But if you’ve been putting off property ownership because you assume being self-employed makes finance too difficult, it may be worth exploring your position before ruling it out.
A finance broker can help you understand how lenders may assess your income, determine your borrowing capacity and compare suitable home loan or commercial finance options.
Your business has a strategy for growth. Your personal finances deserve the same level of consideration.
Ready to explore your property finance options?
Whether you’re considering buying a home, investing in property or purchasing premises for your business, Connex Capital can help you understand your lending position and identify finance options suited to your circumstances.
Speak with Fiona for a confidential discussion about your next move.