How do lenders view seasonal income?

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Simone
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Joined: Mon Oct 21, 2019 11:11 am

How do lenders view seasonal income?

Postby Simone » Mon Oct 21, 2019 11:12 am

Hi, I work as a tour guide for a tour company seasonally and pick up bar and restaurant work during the offseason in Alice Springs, NT. I want to buy my first property (owner-occupied) which has a purchase price of $380k. I have around 50k saved up already and can save more if needed. Just wondering how lenders view seasonal income? Do I qualify? What documents will I need to provide?

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Otto Dargan
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Re: How do lenders view seasonal income?

Postby Otto Dargan » Mon Oct 21, 2019 12:13 pm

Hello Simone. Welcome to the forums.

Lenders consider someone in temporary/ seasonal employment a higher risk than someone in a full-time permanent position.

Seasonal workers will need to establish a reliable income with evidence that you’ve worked for the same employer for the past two years even if it’s for only part of the year. A letter from your employer that indicates you’ll be hired the next season will be required.
Seasonal or temporary workers who have a stable situation usually have an excellent chance of approval. Unfortunately, if we can’t establish a stable income then there’s little chance of approval.

In order to verify your income, you’ll need to provide:
  • Two years’ tax returns or recent payslips.
  • Letter from your employer.
Our mortgage brokers specialise in unusual employment home loans.

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.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Simone
Posts: 3
Joined: Mon Oct 21, 2019 11:11 am

Re: How do lenders view seasonal income?

Postby Simone » Mon Oct 21, 2019 4:20 pm

Yes, I’ve been working for the same tour company for the last 3 years. Last year, my total income was around $55k (35k seasonal and $20k extra work). I can choose to pick up extra hours during peak season. I have a couple of credit cards with a $2,000 limit and no other debts. How much am I able to borrow?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do lenders view seasonal income?

Postby Otto Dargan » Mon Oct 21, 2019 6:01 pm

Hi Simone,

There are two things to consider when calculating how much you can borrow:
  • Loan to value ratio (LVR): The maximum LVR a couple of our lenders are willing to lend to seasonal workers is 90% of the property value. So, your deposit should cover it. If you can come up with a bigger deposit say 20%, you’ll have more choice in lenders.
  • Borrowing power: With a $55,000 annual income, the maximum you can borrow is around $330,000. That is by choosing the right lender and amending your loan structure. The key is to apply with the right lender.
These are just estimates, we’ll have to do a full assessment to work out how much you can actually borrow.
Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Simone
Posts: 3
Joined: Mon Oct 21, 2019 11:11 am

Re: How do lenders view seasonal income?

Postby Simone » Mon Oct 21, 2019 8:54 pm

Okay, got it. Apart from the 10% deposit, how much funds will I need to contribute from my end?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do lenders view seasonal income?

Postby Otto Dargan » Mon Oct 21, 2019 9:15 pm

Hi Simone,

The biggest ticket costs associated with purchasing a property is stamp duty which is waived off in Northern Territory (NT). Still, there are other costs involved such as:
  • Mortgage registration fee: Government fee for registering your lender’s mortgage on the title. For a $380,000 property in NT, this will be around $149.
  • Transfer fee: $149.
  • Conveyancing fee: You’ll need to hire a conveyancer/ solicitor to handle the transfer the property into your name.
  • Inspections: These can cost up to $600 in total.
  • Loan fees: These fees can vary between $0 and $900.
  • Lenders Mortgage Insurance: When you’re borrowing over 80% of the property value, LMI applies. In your case, LMI can be anywhere between $6,366-$7561. You can use our LMI calculator to work out your LMI fee.
If you’re a first home buyer and building or buying a new property you may qualify for NT’s First Home Owners Grant of $10,000.

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.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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