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Contracting and Mortgages

Contracting and Mortgages

Old Mar 14th 2007, 12:09 pm
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Default Contracting and Mortgages

Does anyone know if the rules for obtaining a mortgage here whilst self employed (contracting) are the same as the UK eg. you have to provide 3 years of accounts before they will consider lending you money?

I am currently in a perm job and have been asked about a contract position. However, buying a house is our first priority and I will only consider a contract if it doesn't affect our lending ability.

Can anybody shed some light on what the rules are for lending money?

Thanks
Debs
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Old Mar 21st 2007, 4:27 pm
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Default Re: Contracting and Mortgages

A mortgage should not be a problem if you are contracting as long as it is in the same line of work as you have been working in for several years. Many of the lenders not consider contractors.

If you would like to send me a PM then I can provide you with further details

Sharon
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Old Mar 22nd 2007, 1:15 am
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Default Re: Contracting and Mortgages

You can get a mortgage when you contract, you may just have to shop around a bit. The key requirements are :

1) Period of Contract - who long is it ? week by week isn't good, six months is.
2) Availability of work - if you work through an agency can they write a letter about the availability of work ?
3) Deposit - the more money you can put down as a deposit, the better. If your deposit is low enough that you need additional Mortgage Insurance, don't bother as the insurer will probably reject you, even if the bank says yes.
4) Is it the same work as you have been doing previously for a number of years ? [to repeat a previous posters comment]. This is important as it shows a successful track record.

I'm an IT contractor and I got a bank mortgage after six months of renting, but it did take a bit of planning etc. The banks tend to be more stringent in their lending criteria but try a few brokers, I'm sure you should be able to find something. Give them all of your financial info [all incomes/assets/debts etc in Oz AND the UK if applicable] and ask them to find out who would accept you BEFORE you put in an application to anyone. [The reason for this is if you make multiple applications and get rejected, your credit history will show these multiple searches and will cause delays in the future]. Be up front about being a contractor. If you work through an agency stress that you aren't quite self-employed also.

As in all things, the stronger your financial position, the more attractive you are as a risk to the lender.
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Old Mar 22nd 2007, 1:21 am
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Default Re: Contracting and Mortgages

I'm self employed, some lenders will want you to have held an ABN number for 3 years, if you haven't then you'll need to provide financials (up to date) Some banks/credit unions offer low-doc home loans, this is what I'm using, and my interest rate is lower than the existing outfit that I've used over the past 3 or so years. My advise would be to contact a broker as soon as you can.
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Old Mar 22nd 2007, 2:18 am
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Default Re: Contracting and Mortgages

Originally Posted by debilloyd View Post
Does anyone know if the rules for obtaining a mortgage here whilst self employed (contracting) are the same as the UK eg. you have to provide 3 years of accounts before they will consider lending you money?

I am currently in a perm job and have been asked about a contract position. However, buying a house is our first priority and I will only consider a contract if it doesn't affect our lending ability.

Can anybody shed some light on what the rules are for lending money?

Thanks
Debs
Hiya,


I contract as a midwife 3 days per week. None of the lenders we approached would consider my income unless I had been contracting for 1 year....
We ended up getting our mortgage based on hubbies income only.
We used Aussie Home Loans as our brokers and they shopped around a fair bit...all of the lenders wanted a year.....
Tanya
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Old Mar 22nd 2007, 2:30 am
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Default Re: Contracting and Mortgages

Originally Posted by debilloyd View Post
Does anyone know if the rules for obtaining a mortgage here whilst self employed (contracting) are the same as the UK eg. you have to provide 3 years of accounts before they will consider lending you money?

I am currently in a perm job and have been asked about a contract position. However, buying a house is our first priority and I will only consider a contract if it doesn't affect our lending ability.

Can anybody shed some light on what the rules are for lending money?

Thanks
Debs
I got a mortgage with ANZ and I am a contractor. My situation:
I had a 1 year contract,
I had a 60% deposit,
I work in the mining industry (they took this into account).

I got it within weeks of arriving and got their best rate available too, so it can be done.
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Old Mar 22nd 2007, 2:42 am
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Default Re: Contracting and Mortgages

well done!
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Old Mar 25th 2007, 10:44 am
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Default Re: Contracting and Mortgages

Originally Posted by debilloyd View Post
Does anyone know if the rules for obtaining a mortgage here whilst self employed (contracting) are the same as the UK eg. you have to provide 3 years of accounts before they will consider lending you money?

I am currently in a perm job and have been asked about a contract position. However, buying a house is our first priority and I will only consider a contract if it doesn't affect our lending ability.

Can anybody shed some light on what the rules are for lending money?

Thanks
Debs
Hi - we have recently been through this, I was able to get a Australian mortgage based on my UK wages and employment. We went through a mortgage advisor, which did not cost us at all, the fees for the broker are paid for by the bank. Now you might say, well eventually you end up paying anyway, and probably that is true, but we were given a load of mortagages to choose from and eventually with good advice from the broker we settled for AMP. This is a investment mortgage, as the property is rented till we migrate out there, but we are very happy with the setup, a interest rate of 6.4% (higher than here, but really good for out there, especially since it it investment) online banking, and a credit loan on the mortgage. The broker we went through is not tied down to commission so he is not out to sell you anything he can, he really looked after us , and I would recommend their services. (Based in Sydney - PM me if you want more details) What they did ask from us was employment payslips for 6mths , we gave 12mths, bank statements, and details of our property and mortgage here. All our paper work was sent recorded post, and returned the in the same way. I did explain to him that we are selling up here in 2007 and will be migrating down, so the money on this house, will be going into paying out this mortgage, he addvised not to pay it out, but to restructure and pay 90% back, keeping the mortgage open, reason being that if we wanted to extend or move , then we would not have employment history in Australia and this would make it difficult to get credit.
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Old Mar 25th 2007, 4:28 pm
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Default Re: Contracting and Mortgages

he addvised not to pay it out, but to restructure and pay 90% back, keeping the mortgage open, reason being that if we wanted to extend or move , then we would not have employment history in Australia and this would make it difficult to get credit.
The one thing you need to be aware of when you take out your home loan over here is the cost of paying out your loan early (Deferred Establishment Fee "DEF"). Not all lenders charge the same fee and not all products have the same penalty, generally on a discounted product you will be charged a DEF.

For example with AMP there is a DEF of $ 1,000 if the loan is discharged within 4 years from original settlement date. While the DEF for an Intro loans is 1% of the original loan amount if discharged within two years. (I think this is across all their products)

We got stung with HSBC and a DEF when we first arrived. The DEF was detailed in the paperwork but we just put our trust in the broker. We didnt find out until we wanted to move lenders how much it would cost. Hence we are still with HSBC.

That said if you are happy with your lender and dont have plans to move to another then it is nothing to worry about. If you move to a different product with the same lender then your broker should be able to negotiate a reduced or nil Deferred Est Fee, depending on the loan you have.

Anyway Debs what I am trying to say is, ask the right questions, the lowest interest rate may not be the best alternative for your situation. Your broker should explain why they are recommending the particular product to you, provide you with a comparitive rate schedule and disclose to you upfront fees, early payout fees, and any commission being paid to them when they recomend and sign you into a product.

Good luck with the move
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