According to data from the Australian Bureau of Statistics, eight per cent of Australian workers are classified as contractors. The appeal is not a surprise: you can choose what jobs you take on, your hours are more flexible, and depending on the industry you work in, you can potentially earn more money.
If you are a contractor who is looking to buy a property, you may be wondering if you will be able to take out a mortgage. The short answer is yes, but securing a loan may be a more challenging process.
Unlike a typical salary worker, you may not have regular and consistent pay slips that you can use to show evidence of steady income. With contractual work, it can be difficult to track your salary and therefore, it is harder to establish your financial situation to your lender.
Without a fixed, permanent source of income, lenders will generally view you as a potentially risky borrower. This is in spite of the fact that you may be operating in an industry where there is plenty of work and/or you are earning a good salary.
That said, there are a number of things you can do to secure a mortgage.
Save up a sufficient deposit
A home deposit is a key element when buying a property and the more money you can save up, the better off you will be.
As a general rule, if you are an owner-occupier you should have five to 10 per cent of the purchase price as a deposit. If you are an investor, 10 per cent of the purchase price is the ideal ball-park, although it is possible to purchase with less.
In addition, it is important to remember that lenders will want to see that you have a good history of saving money.
Get your paperwork in order
When applying for a home loan, the more supporting evidence you can provide, the better you will be. There is no such thing as providing too much information.
Documentation that you should provide to lenders include bank statements, work contracts, pay slips and also statements of regular bills.
Consult a mortgage broker
You should speak to a mortgage broker who can assist you in applying for a home loan. A broker will be able to compare a range of different mortgage products on the market and recommend one that is right for you and your unique circumstances. Moreover, a broker will negotiate with the lender and iron out any issues that may be a barrier in getting your home loan application approved.
Call your local Mortgage Choice broker today to help with your home loan needs.
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