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How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 7:45 pm
by Carlton
I have been freelancing as a wedding photographer and I am sick of paying high rents. I have been saving up a deposit for a home loan, but need it seems like my employment status might be a problem with some banks. I am looking at a property in QLD priced at $743,000 and have saved $67,000.
How can a freelancer get a home loan approved?

Re: How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 8:07 pm
by Otto Dargan
Hello Carlton. Welcome to the forums.

Getting your home loan approved depends on how lenders will assess your application. Most lenders might think that your income is inconsistent and is project-based. Therefore, you will be subject to stricter lending criteria and might reduce your borrowing capacity.

However, if you do meet their lending criteria and provide the required documents to prove your income, you can borrow:
  • 90% of the property value if you have strong income and paid all your debts on time. Lenders mortgage insurance will be charged if you borrow over 80% of the property value.
  • 95% of the property value if you have a clean credit history, strong income, reasonable asset position, minimal debts and have at least 5% in genuine savings.
  • 105% of the property value if you can get a home loan with a guarantor. Once the loan drops down to 80% of the property value, then you can remove the guarantee.
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan as a freelancer.

Cheers,

Re: How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 8:14 pm
by Carlton
Ok, what documents do I need to provide to prove my income?

Re: How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 8:18 pm
by Otto Dargan
Hi Carlton,

Australian lenders deal with self-employed borrowers regularly so you’re more likely to get approval if you can qualify as one. This means you’ll need to have an Australian Business Number (ABN) and have completed your financials for at least two years.

They work on a contractual basis and are not committed to long term employment.

Therefore, you will need to provide lenders: Your tax returns will prove that your income is consistent and ongoing. Therefore, most lenders require freelancers to be employed for at least two to three years.

Cheers,

Re: How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 8:23 pm
by Carlton
I do have my documents in place, which is a relief. But, I frequently use credit cards. Do you think this would be a problem?

Re: How can a freelancer get a home loan approved?

Posted: Fri Oct 04, 2019 8:27 pm
by Otto Dargan
Hi Carlton,

Having multiple credit cards might be a red flag for lenders as it might indicate that you are living beyond your means. However, if you have been able to make regular repayments and never used the cards to their full limit, then banks and lenders will look at this favourably.

If you have unused credit cards, it is best to cancel them, as most lenders will assume that you use credit cards fully drawn to the limit.

If your repayments are made on time, some banks and major lenders don’t even take your credit limit into consideration when assessing your borrowing power and instead use the largest balance on your card from the last three months.

You can learn more about improving your borrowing power here.

Give us a call on 1300 889 743 or fill in our free assessment form and we will work with you to get the amount you need.

Cheers,