Contract work spans many sectors and offers increasingly more flexibility than full-time work. Contractors have a high earning potential, and some of Australia’s richest individuals undertake contracts!

So with it becoming so popular, you would think that banks and lenders would recognise it as a stable form of employment? Unfortunately, that is not always the case. Read on to find out how we can help you regardless of your employment situation.

Why can’t I get approved?

Because you are not employed full-time, there are times where you may have no flow of income. This can be a problem with lenders when trying to get approval for a mortgage!

What do the lenders think?

Are you self-employed or a PAYG employee? There are many factors that the banks take into account when determining whether to approve you for a mortgage. Some include the type of contract you are on, the industry you are working in and the method of remuneration. Lenders all have differing policies and require varied forms of income declaration.

We can help! As we work with many different lenders we will be able to find one willing to assess your loan application. If you have a property in mind and want to know more you can enquire online or contact our mortgage brokers on 1300 886 115.

Contract workers

Contract work varies from industry to industry. You may be paid upon completion or during the course of your work. This employment type is now common place in a variety of industries including:

• IT
• Mining
• Journalism
• Government sector
• Construction
• Project management

Most contracts have a fixed end date and terminate upon completion of a project. This is commonly the case in construction projects, IT and mining. However, depending on the type of work involved, there is also the option of undertaking a rolling contract that does not specify an end date.

As a contractor you may also earn bonus income or possibly commission income upon completion of the project or specified targets along the way.

Benefits of being a contractor

Being your own boss isn’t the only advantage of being a contractor. Contractors are generally on better rates than permanent employees and are not committed to long term work. This allows you to travel, take up new projects or work when it suits you.

Self-employed

This work typically includes people in IT and construction industries, sales roles, project management and consultancy. If you are self-employed and are receiving a regular income or daily rate, then the bank may require that you provide:

• A copy of the contract,
• Letter of employment which specifies your hourly rate and the number of hours that you work, and
• Most recent tax invoices.

We know of lenders that will grant approval, as long as you can prove that your income is consistent and that you have no major expenses such as staff, equipment or stock. In other words we need to prove that you are more like an “outsourced employee” rather than a standard business.

There may also be other income verification requirements, so it is best to enquire online or contact our mortgage brokers on 1300 886 115 to discuss your individual situation. That way we can ascertain what documentation you may need to provide the banks with.

PAYG

PAYG (Pay As You Go) employees are taxed according to their earnings. Your income may be weekly or monthly, and this will be calculated to determine your average annual income. Most PAYG employees undertake contracts from agencies or other recruitment entities. For many PAYG workers, there is also the possibility of full-time employment when their current contract expires.

If you are a PAYG employee on a fixed term or rolling contract, lenders may impose varying requirements for income verification. Some lenders may require that you provide:

• Your most recent pay slip with a year to date figure that shows 3 months of your earnings and that indicates ongoing employment
• Most recent tax return
• Employment contract with at least six months remaining on the contract

You may also be subject to other employment checks. If you are unsure of whether you will be able to meet this criteria, call one of our mortgage brokers directly and we can find out which lender will be suitable for your situation.

Why you should speak to us!

Some of our best customers are IT engineers and project managers! We have dealt with all sorts of difficult cases before and have the specialist knowledge needed to ensure that we submit your application with the right lender to avoid decline and disappointment. Speak to one of our brokers today on 1300 886 115 or enquire online to get your employment mortgage application process started!
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