Freelance designer needing a home loan

Any general questions you might have in regards to loans and finance.
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wardove
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Joined: Wed Jul 03, 2013 8:31 pm

Freelance designer needing a home loan

Post by wardove »

Hello,

I am a freelance designer working at a web design company. I was hoping you could give me some advice on how to get a home loan. 8-)

Thanks
WD

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

Hi WD

Freelance workers can apply for a Temporary / Agency worker home loan. Under this category, you should have worked at your current job for at least 12 months. Some of our lenders will also accept shorter periods up to three months but you need to have a stable income and a history of working in the same field.

Unfortunately we cannot help applicants who have no employment history – this is because to get approved, you need to show that you can earn a good income and without this lenders will find your application very risky.

Could you tell me more about situation such as how long you have been working for, your income and about the property you wish to buy?

Cheers,
Otto
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wardove
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Joined: Wed Jul 03, 2013 8:31 pm

Re: Freelance designer needing a home loan

Post by wardove »

Hi Otto, I’m earning about $1,500 a month at my current job. My contract is for 1.5 years and I have three months left on my contract.

I want to buy a house worth about $500,000 located in Queensland.

WD

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

WD,

Your employment period is long enough to satisfy our lenders.

Do you already have a deposit and are they genuine savings?

Cheers,
Otto
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wardove
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Re: Freelance designer needing a home loan

Post by wardove »

Hi again Otto!

I have about $60,000 in savings which I intend to use as a deposit. I inherited part of this when my father passed away and we had to sell his house. The money was used to pay off his debts and split among me and my three siblings.

And I’m not too clear on the concept of genuine savings, but I think it’s got something to do with the length of time I’ve had it in the bank right? If so, I’m happy to report that I’ve had the money for more than 7 months now.

What do you think of this?

WD

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

Hi WD,

Yes, genuine savings refers to any savings held or accumulated over a period of three months or more. While inherited money held in a savings account are not considered genuine savings, we can help you find a lender who will accept this.

In any case assuming that you wish to borrow the rest, which would be $440,000, that means that your LVR (Loan to Value Ratio) is 88%.

This is good since temporary or agency workers can usually borrow up to 90% of the property value and even 95% if they have a strong financial position. You might have to pay an LMI premium since your LVR is above 80% but otherwise your home loan application looks fairly positive.

Cheers,
Otto
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wardove
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Re: Freelance designer needing a home loan

Post by wardove »

Hey Otto, that sounds great – I’m really happy to know that you think my situation is positive. I will think more about this and post again.

WD

moodyjack
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Re: Freelance designer needing a home loan

Post by moodyjack »

Hi, I was just reading this thread and I got a bit confused about the terms you used: LVR and LMI. Could you please explain that?

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

Hi moodyjack

LVR or Loan to Value Ratio is basically the percentage of the property value that you wish to borrow, i.e. the loan amount divided by the property value.

LMI or Lender’s Mortgage Premium is a fee charged by the lender in order to reduce their risk of loss in any home loan application, usually if the LVR is over 80%. This is a one time, non-refundable fee which serves as insurance against the loan amount.

I can help calculate your LVR and whether or not you would have to pay LMI if you tell me how much you want to borrow and the price of the property you wish to buy.

Cheers,
Otto
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moodyjack
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Re: Freelance designer needing a home loan

Post by moodyjack »

Thanks, well it’s like this: I want to buy a unit in NSW for $430,000 and I need to borrow $400,000 from the bank.

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

moodyjack, according to your figures, your LVR would be slightly over 93%. You will have to pay LMI unless you can get it waived, for example if you are a doctor and can apply for a special professional’s package.

Another way to avoid this LMI would be to save enough money so that your LVR is 80% or less and apply again.

Cheers,
Otto
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wardove
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Re: Freelance designer needing a home loan

Post by wardove »

Otto, I forgot to ask, how much LMI would I have to pay?

WD

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Otto Dargan
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Re: Freelance designer needing a home loan

Post by Otto Dargan »

WD, LMI fees can vary depending on many factors such as if you are a first home buyer, the state you wish to buy in, your employment history, the lender’s guidelines, etc.

I estimate that your LMI could turn out to be anywhere from $5000 to $6000 or more. Try out our LMI calculator and fill in all your other details and you can find the cheapest LMI that is available to you.

Otherwise give us a call on 1300 889 743 or send us an online enquiry to speak to one of our specialist brokers who can assess your situation in more detail.

Cheers,
Otto
Otto Dargan
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P | 1300 889 743
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