Self-employed borrowers continue to get cold shoulder from majors
Non-bank lender Bluestone Home Loans has seen a considerable uptick in Alt Doc lending in recent times.
In the past year alone, Alt Doc loan volumes have surged by 260% when comparing the 2025 first quarter to the 2024 first quarter. Stretch that time frame out to 2019, and Alt Doc volumes at Bluestone have seen a 39-times increase.
This coincides with a rise in self-employed Aussies, with around 15% of the workforce now calling themselves their own boss, according to Bluestone’s research.
Yet access to housing finance through traditional means remains painfully difficult for self-employed workers and small business owners, with the Big Four banks routinely knocking back mortgage applicants who don’t fit their strict lending criteria.
Often, the big banks will demand reams of bank statements and years’ worth of detailed financial history to satisfy serviceability requirements, whereas private lenders have more flexibility to accept alternative income-verification methods.
The conservative lending practices of the major banks stem from the substantially higher regulatory oversight that comes with holding customer deposits. Given the lingering memories of the Global Financial Crisis and the fallout of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, few would begrudge their conservatism.
It is little wonder then, that aspiring self-employed homeowners are looking to the likes of Bluestone and its non-bank contemporaries for funding, with their more flexible lending arrangements, when the majors give them the cold shoulder.
Bespoke solutions
“More and more customers are finding that through a change in employment status (i.e. moving to self employed or multiple income earning sources) they are unable to verify income in a traditional method such as payslips,” Bluestone chief commercial officer Tony MacRae (pictured) told MPA.
“Majors often simply rely on credit scores to determine a customer's credit worthiness,” MacRae said. “At Bluestone we look beyond the score and take the time to understand the customers’ circumstances and risk mitigants to ensure we are about to provide solutions for most customers.”
"Traditional lending criteria can be a major roadblock for self-employed borrowers,” said Aaron Taylore, Bluestone’s head of non-standard lending. “At Bluestone, we take a common-sense approach to assessing real financial situations, making homeownership more accessible for those who drive Australia’s economy.”
Bluestone touts a specialist credit team that assesses loans on customers' individual circumstances.
“We have simplified our processes and credit policies to ensure more consistent and timely approvals resulting in the majority of deals being picked up and assessed within one day,” said MacRae.
“We are also excited to be partnering with Docuscan with the introduction of a new lending platform that will utilise AI to automate the verification processes meaning brokers and borrowers can expect even faster decisions.”
MacRae does not expect to see the Alt Doc market cooling off any time soon.
“As more and more customers change their working arrangements and rebalance work lifestyle balance, we expect this market to continue to grow,” he said.
“This will continue to be an important and growing source of options and solutions to brokers to ensure they are able to accommodate more and more customers with home ownership needs.”
By the numbers
According to Bluestone’s latest broker survey, 75% of brokers submitting an Alt Doc loan with the lender find the process is easier than with a traditional bank, while 80% believe Bluestone has helped them service more self-employed and alternative-income clients.
Evidently, Bluestone expects Alt Doc lending to remain a cornerstone of its business strategy going forward.
The group recently overhauled its branding to celebrate 25 years in the game. Part of the rebranding was to refocus its customer-centric vision as a 100% broker-originating home loan provider.
“For 25 years, Bluestone has helped Australians achieve their homeownership dreams, often when traditional pathways weren’t an option,” chief executive Mark Jones said at the time of the rebrand.
Alt Doc financing will play a major part in making those dreams a reality.
