Apply for mortgage when on contract job

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  dcep on 06/06/2018 - 14:29

  +1

  i won't count on preapproval , it means nothing at all

  Is that possible to secure a loan with best interest rate?
  Yes if you keep it below 80% LVR

  • 

    codinghelloworld on 06/06/2018 - 14:36

    My plan is purchase for the next 6 months, the price range is $400k-$500k so definitely I put over 20%. However, I don't want to involve to a situation that the bank not approve the final loan when they find out that I am moving to Brisbane, means lose current job and find other job. Or the bank refuse the loan because I am still in probation of new job.

    That is likely I will lose the deposit if the loan is not go through.

    • 

      dcep on 06/06/2018 - 14:49

      +2

      no you won't lose your deposit

      reiq standard contract of sale has provision for finance + b&p condition

      just tick it and put 2 weeks or more for finance date with subject to own finance approval

      if seller/agent asks for unconditional / waive your rights on finance condition , just walk away.

      • 

        codinghelloworld on 06/06/2018 - 15:21

        Great, I don't know I will have that tick on the contract. First home owner, totally newbie. :)

        Thank you.

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  tsunamisurfer on 06/06/2018 - 14:48

  +1

  OP I was in a similar situation. An IT Consultant doing contracting for several years, but just started a new contract with a new company through a new agent.

  Despite showing 5+ years of seamless contracting work BankWest would not take into consideration my income when determining borrowing power. This was because I had started a new role and to them its a reset.

  Thankfully for me my partner's income alone was enough to cover the mortgage but I was still on the mortgage (just that my income couldn't not contribute to how much we can borrow).

  I spoke to a broker who mentioned each bank has slightly different policies and some will actually look at the long term view of your contracting work, if there is a good continuance in work they will accept that even though you just started a new one.

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  [Deactivated] on 06/06/2018 - 16:00

  +1

  If you have a contract you can show the bank, and more than 20% deposit, you're unlikely to have a problem. Unless you're bidding at an auction it's pretty standard to be subject to finance in any case.

  Banks will consider how long you have been in the job and the length of your contract. But unless they think you're really not going to be able to make the repayments and the property price could fall more than your deposit, they won't have much concern. Worst case for them they sell your property and get their money back.

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  thatonethere on 06/06/2018 - 20:20

  +2

  Might be best to try a mortgage broker who can look at your situation and then get in a bank or credit union who is ok with your contracting career.

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  Sofie519 on 06/06/2018 - 21:56

  My first question to you would be, what were you doing prior to you 6mth contract, and what do you intend on doing after the next 6mth contract expires.

  Contracting work within the same industry/profession isn't an issue as long as you can demonstrate you have stable income over the last few years and the time between contracts are either very short or nonexistent. So have you always been contracting? are you self employed? Will u be applying for first home owners grant in Qld?

  There are still many options for you, but until we know more, it's difficult to point u in the right direction.

  By the way, a pre-approval means nothing, if your circumstances are expected to change. You will be reassessed at the time of purchase. A lender saying they are likely to lend u money based on ur current circumstances is not going to just give you the money in few months time without confirming whether those circumstances have changed or is about to change.

  • 

    codinghelloworld on 07/06/2018 - 06:55

    I worked in IT sector over 10 years and will continue to work on that in QLD. I've been contracting over the last 2 years without gaps between the jobs. About the home owners grant, I think I am not eligible since the area I am going to buy does not have new properties.

    As you said that, it is better to apply for a loan when I already move to Brisbane and secure a job there.

    • 

      Sofie519 on 07/06/2018 - 08:43

      +1

      Well if you're not going for FHOG~
      option: buy your property in Brisbane as an investment now, so you are assessed on your current circumstances, if you feel it might benefit you, rental income will also help serviceability. Move in if you relocate to QLD, you can change your loan to OO if that suits you.

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  chumlee on 07/06/2018 - 07:06

  +1

  Maybe approval for an investment property which you then move in to but highly unlikely you will be approved for a home loan if you tell the bank it's your PPOR.

  We are only 1/2 way through the royal commission and your example would be a breach of responsible lending

  • 

    codinghelloworld on 07/06/2018 - 10:15

    Sorry for this newbie question, what do you mean? You mean I apply for an investment loan, then after one year I reapply for a PPOR mortgage to revoke the investment loan, so it means I breach the investment loan and they have the right to refuse the PPOR mortgage?

    • 

      HighAndDry on 07/06/2018 - 10:27

      Banks never require you to actually use an investment property as an investment property. You can very well purchase and borrow as if it were an investment property, and then move into it later. The only effects might be differences in interest rates/possible discounts, etc.

      • 

        codinghelloworld on 07/06/2018 - 10:51

        Yes, I understand your words. If I live in my own investment property, the only difference is higher interest rates for long term.

        So my question for @chumlee is will I breach the investment loan if after one year I change my investment property to PPOR?

      • 

        HighAndDry on 07/06/2018 - 11:11

        +1

        @haisergeant: No - banks don't care. There isn't a legal requirement - contractual or otherwise, that you use a property as an investment property, even if you've borrowed money under an investment loan. If you want to change your LOAN to a PPOR loan down the line, the bank will look at your financials at that time and either approve the change or not. If they don't approve it, then it just doesn't change. That's it.

      • 

        chumlee on 07/06/2018 - 12:06

        +1

        @haisergeant: banks don't care if you live in it. It just as an investment loan they will factor in rental income which will help with capacity.

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  Quagles on 07/06/2018 - 12:23

  I was in a similar boat. 9 years full time work in a related field.

  Started a contract job for first time. Only 3 months in to a 12 month one.

  Forced to refinance due to relationship breakdown.

  Nab my existing bank wouldn't touch me.

  State custodians were great. Fully understood my situation. Financed me.