Why is it difficult for contractors to get a home loan?

Any general questions you might have in regards to loans and finance.
Sanadis
Posts: 9
Joined: Tue Mar 27, 2018 1:53 pm

Why is it difficult for contractors to get a home loan?

Postby Sanadis » Fri Jun 01, 2018 12:32 pm

Hi team,

I’m a PAYG contractor for the last 3 years. My YTD income in the last year was $78,900. One of my friends applied for a home loan and his application was rejected, so I’m a little bit wary and don't want to rush into anything without assurance of being approved.

I have saved a good amount of money as well (around $100,000). Also, the business is repetitive, I’ve been getting the contract from the same place for the last 3 years. I believe this is good!! I was wondering how will the lenders view my home loan application?

Hope to hear forward from you soon.

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Otto Dargan
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Re: Why is it difficult for contractors to get a home loan?

Postby Otto Dargan » Fri Jun 01, 2018 1:45 pm

Hello Sanadis. Welcome to the forum.

Lenders typically treat contractors like casual employees. This might partially explain the rejection of your friend’s home loan application by the bank.

Contract workers 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 primary contractor management firms.

PAYG contractors (your case) are usually 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 generally have to prove a strong track record of experience in the same industry as well as future employment stability for getting their home loan application approved. Also, many lenders require over 12 months in your current role as well as evidence that your contract will be continuous and ongoing.

If you want to know more about these then you can check out our website. You can also speak with one of our expert mortgage brokers directly by calling 1300 889 743 or by filling in our free online assessment form. This applies to your friend too :)

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

Sanadis
Posts: 9
Joined: Tue Mar 27, 2018 1:53 pm

Re: Why is it difficult for contractors to get a home loan?

Postby Sanadis » Fri Jun 01, 2018 3:34 pm

Oh, that’s a relief. Can you please tell me what are the documents that I need to arrange for an application?

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Otto Dargan
Mortgage Specialist
Posts: 7021
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Why is it difficult for contractors to get a home loan?

Postby Otto Dargan » Fri Jun 01, 2018 6:04 pm

Hi Sanadis,

Regular documents are required for a home loan application like basic identification documents and savings statements. In most cases, you’ll be asked to evidence your income and future employment stability through a letter of employment.

They need to print the letter on their letterhead, keep the details, print, sign and fax it to your mortgage broker.

The secret to getting a home loan while working as a contractor is to apply with the right bank! To know which lender is suitable for you, call us on1300 889 743 or enquire online.

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

Sanadis
Posts: 9
Joined: Tue Mar 27, 2018 1:53 pm

Re: Why is it difficult for contractors to get a home loan?

Postby Sanadis » Fri Jun 01, 2018 10:10 pm

Thanks Otto. I'll call your office in a few days. I'll be sure to give your details to my friend as well. Cheers.


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