Contractor home loan

YES contract workers can get home loans!

With a labour shortage gripping Australia many people have taken the leap into contract employment to secure better pay. At the same time more companies are outsourcing departments & staff to become more efficient. Lenders often outsource their staff but strangely enough don’t seem to understand or support lending to contractors!

ContractorsPAYG contractors are employed on a fixed term, short term or long term contract, usually with an end date or in some cases with an automatic roll-over to a new contract. They can receive normal holiday & sick leave benefits (depending on their contract terms) while also having their tax withheld and super paid for.

Self employed contractors are usually sole traders with a registered ABN who invoice their employer and then pay for any expenses such as their own wages from their business’s income. Note that we can help self employed contractors in most situations, even if they have set up their own company which invoices the company they contract to.

Subcontractors can be employed on a PAYG basis or as a self employed contractor. Subcontractors are common in the mining and construction industries.

Each type of contract worker is treated differently by the banks, read on to find out more…

What do lenders think?

Contractors are typically treated like casual employees by the banks. They are considered to be in a very unstable employment arrangement with a high chance of having their contract cancelled, even if they are employed through a major contractor management firm such as Contract1 or Ambit.

PAYG contract workers usually have great trouble applying for a loan with most banks unless they can prove a strong track record of experience in the same industry and prove that their future employment is stable. However one of our banks can consider lending to people employed on a PAYG contract with normal home loan rates even if they have only been one day in their job!

Self employed contractors are usually treated by banks as normal self employed borrowers, meaning they need to be in their current role for two years before they can get a loan. One of our lenders now treats self employed contractors as PAYG if they just contract to one main employer and if they work for a hourly or daily rate. If your pay fluctuates significantly then we may need to prove a 3 month history of your income to enable the lender to accurately determine your income. Generally the lender will calculate your average income less any GST component and taking into account 2 – 4 weeks in unpaid holidays each year. All of our mortgage brokers are self employed contractors and know how to get your loan approved!

Mining contractors are a special case because they earn some of the best salaries in Australia however may have fixed term employment contracts or may move between mines depending on the availability of work. One of our lenders can approve mine worker home loans by taking a common sense approach and acknowledging that most workers can easily find alternative employment in the event that their contract is not renewed.

IT contractors or consultants are the most common type of contractor that we work with. Specialist IT advisers are some the highest paid workers in Australia yet many lenders do not understand their industry and decline their loan! Due to the low number of skilled IT consultants in Australia and the high demand from employers we believe IT industry contract workers are actually a very low risk and so we are happy to assist you.

The secret to getting a home loan while working as a contractor is to apply with the right bank! Please enquire online to speak to a mortgage broker who can help you to get approved!

Which lenders can help?

Contract worker home loans are usually sourced through major banks that specialise in self employed borrowers & PAYG contractors. Non conforming non-bank lenders may also be able to help however in most cases we prefer to work with major lenders as then you can get a very competitive interest rate.

Which loan types are available?

All loan types: Professional packages, basic loans, lines of credit, fixed rates.

How much can I borrow?

You can borrow up to 90% of the property value plus LMI using a bank loan depending on what type of employment contract you have with your employer. In rare cases we can lend 95% or 100% (100% only available as a guarantor loan).

What can I use the loan for?

Home / domestic use, investing, purchases, mortgage refinances and construction are all acceptable loan purposes.

Who this loan is for?

PAYG contract workers / contractors, subcontractors and self employed contractors that have only themselves working in their own business and who contract to one main employer / client. Low doc loans are also available.

Discounts

Professional package and basic loan discounts are available. You should be eligible for a significant discount below the bank standard variable rate.

Loan features

All loan features: Interest only, fixed rate, line of credit, 100% offset, redraw, extra repayments.

Notes

Contract employees usually have a high chance of getting their loan approved if the loan is submitted to the right bank. We are experts in this field and would love to help you buy a home or get a better interest rate by refinancing.

Please Enquire online for a quote from a contractor home loan lender.