The changing lifestyles and the potential to earn a higher income than a full time worker has made contracting or consultant work a popular choice for Australians.
The problem is that most lenders take a very conservative view of consultants due to the fluctuating nature of their employment and income.
How much can I borrow?
By choosing the right lender, a consultant may be able to:
- Borrow up to 90% of the property value plus Lenders Mortgage Insurance (LMI): This depends on the type of contract you have with your employer.
- Borrow up to 95% of the property value: As long as you have a strong financial position.
- Borrow up to 100% of the property value: If you apply with a guarantor.
Speak to a member of our team today on 1300 889 743 or by completing our free assessment form and find out how we can help you qualify for a consultant home loan!
What if I’ve just changed jobs?
Most banks may not consider you eligible for a home loan until your probation period has ended. Even if you’re a consultant, you’re employed on a probation period when you change jobs.
Fortunately, not all banks follow the same policy. If you’re employed on a contract basis, having at least two years of experience in the same line of work can allow you to qualify for a consultant mortgage.
We may even be able to get you approved for a consultant home loan even if you’ve only been in your new job for a day!
What documents will I need to provide?
Most lenders will ask you for specific evidence regarding your income, typically in the form of your two latest payslips and tax returns for the past two years.
Luckily, there are specialist lenders who offer low doc solutions and may consider your home loan application even if you can’t provide your tax returns for the last two years.
You will, however, need to provide at least one of the following documents as alternate evidence for your income:
- Tax invoices from the last 3 months.
- Bank statements from the last 3 months showing regular salary credits.
Most banks may also ask for a letter from your employer confirming that you’ll be working for them as a consultant for the long term. This helps address the lender’s concern over the stability of your employment.
To make it easier for your employer, you can use this employment letter template, which will be accepted by most major banks and lenders.
What discounts are offered?
You may be eligible for professional package and basic loan discounts, including significant interest rate discounts below the bank standard variable rate, provided you meet standard lending criteria relating to your ability to pay off the home loan (serviceability).
Our expert mortgage brokers have a strong knowledge of the credit policies of the major banks and the more than 40 lenders on our panel so they know which ones are more willing to extend you a discount.
Call us on 1300 889 743 or complete our free assessment form to talk to one of our mortgage brokers. They can help you build a strong case so you have a better chance of qualifying for competitive home loan rates.
Do I still get all of the same home loan features?
On a consultant home loan, you can still get all of the same home loan features as a full doc home loan:
Why are banks so conservative?
Lenders want to see that a borrower is in a stable employment position so that they can keep making mortgage repayments without any hardship.
Lenders assess your work situation just as they would a casual employee who just started a new job.
Bank policy hasn’t caught up with their pre-approval systems meaning that, on paper, consultants appear to be less financially stable than someone who works full time.
To the banks, consultants have a high chance of having their employment contract cancelled, even if they’re employed through a major contractor management firm, such as Contract1 or Ambit.
Luckily, we consider consultants to be low risk borrowers because:
- We understand how they work.
- They tend to have steady incomes.
- Some tend to get paid really well depending on the industry and their skills.
- They tend to spend less on work-related expenses than full time workers.
What can I use the home loan for?
You’ll be able to use a consultant home loan for:
- Home / domestic use
- Investment
- Purchases
- Mortgage refinances
- Construction
Which lenders can help me?
Home loans for consultants are generally sourced through major banks that specialise in Australian Business Number (ABN) consultants and Pay As You Go (PAYG) consultants.
In most cases, we prefer to work with major lenders because you’ll have a better chance at getting a very competitive interest rate.
However, since our main goal is getting you approved, we may have to go with a non-bank lender in some cases.
This isn’t a bad thing!
Interest rates really aren’t that much different.
What about income protection payments?
Even if the payments are permanent and ongoing, some banks won’t approve a mortgage using income protection payments. However, there are some lenders that can help.
You can check out our mortgage using income protection payments page to learn more.
Speak to us about a consultant home loan today!
As a consultant, the chances of your loan being approved is fairly high as long as your application is submitted to the right bank.
We’re consultant home loan experts so we know exactly how to build a strong case so you have a higher likelihood of getting approved with a lender that actually takes a common sense approach to your income and employment situation.
Call us on 1300 889 743 or complete our free assessment form to get a quote for a consultant home loan today!
