A self-employed borrower who started trading eighteen months ago has usually been stuck. Most lenders want two years of tax returns, so the first year of a new business is a dead zone for credit. Ubank is trying to close that gap.
The lender now lets eligible sole traders apply for a home loan using one year’s tax return plus a Notice of Assessment from the ATO. It lends up to 80% LVR, and the stated turnaround is around two days. Applications come through brokers. Those are the facts the announcement supports. The rest of this piece is analysis, not reporting from inside the lender.
The two-year rule was always a proxy
Lenders ask for two years of returns because self-employed income is lumpy. One strong year can hide a collapsing business, and one weak year can hide a stable one. Two data points give a crude trend line.
Cutting that to one year does not remove the risk. It shifts it onto the lender’s other safeguards: the 80% LVR ceiling, the serviceability buffer, and how the credit team judges the income in that single return. That is why the LVR cap matters more than the paperwork change. A borrower with a 20% deposit has real equity at stake, and the lender has a cushion if the business falters.
Why a lender chases this segment now
Sole traders are a pool of borrowers many lenders handle slowly or decline outright. Ubank has pitched itself as a digital, fast-decision lender, so speed is a natural wedge. A two-day approval for a customer type that normally waits weeks is a clear selling point to a broker with a stuck file.
It also fits the wider competition for broker-channel volume. When credit conditions are tight and borrower numbers are limited, lenders look for niches where they can win flow without a rate war. Easier documentation is a cheaper lever than cutting the headline rate.
The catch
One year of income evidence is thinner evidence. Lenders can offset that with lower LVR, tighter income shading, or pricing. Borrowers should ask which of those the lender is using, not just whether the application is easier.
What the credit-risk trade-off looks like
There are three ways this could play out:
- Base case: a modest volume of well-documented borrowers, mostly in stable trades and professional services, with arrears in line with other self-employed lending.
- Upside: the lender captures good borrowers other banks overlooked, at pricing that reflects the risk.
- Downside: an income dip hits a borrower with only one prior year of history, and there is no earlier record to show whether the dip is normal for that business.
None of these is certain. The honest position is that the data on how this specific cohort performs will take a few years to emerge.
What brokers and borrowers should check
Brokers will be the main gatekeepers. The practical questions are straightforward:
- Is the single year of income stable enough to survive a serviceability test with a buffer?
- Does the borrower have a clean ATO record and a Notice of Assessment that matches the return?
- Is a 20% deposit realistic, given the 80% LVR ceiling?
- What does the rate look like against a lender that wants two years but offers a lower price?
A faster approval is not always a cheaper loan. For a borrower who can wait a year, a conventional lender may still offer better terms.
What it signals for the market
This is a small policy tweak from one lender, not a market shift. But it points to something larger: lenders are competing on process and eligibility as much as price. If other lenders follow, expect looser documentation rules for self-employed borrowers to become a more common competitive tool. That would widen access but also raise the importance of the LVR and serviceability guardrails.
For more on how lenders, brokers and refinancing options fit together, see our home loans, lenders and refinancing guide.
If you want the weekly signal on lending and housing, subscribe to the Australian Property Review newsletter.
General info, not financial advice.
