What would you do in my situation? (Home Loan/Business/Starting a family)

CryssieJade on 29/04/2022 - 14:32
Last edited 29/04/2022 - 14:33

Tricky situation here and a lot of things going on, so bear with me…

  • Casual/Self Employed wage (Photographer). No possibility of going full time with my employer.

  • Been saving for a house deposit for 4 years, I have saved a very healthy deposit.

  • The only broker that has offered me a loan of any kind, has told me that I can borrow only $130,000 (I was hoping for $200,000).

  • My loan application is tricky because of my income source, and that my industry was affected by lockdowns. Lenders barely want to know about me because I was on Jobkeeper.

  • I have been advised to potentially wait until June 30 so that my next tax return could make my loan amount higher (Self Employed/Casual loan applications are based on multiple tax returns to show a pattern of yearly 'salary')

  • The problem is, I was on government payments this financial year too, because of Covid lockdowns, so it's not as though that 'undesirable income' is going to drop away any time soon

  • I am 38, planning to have children, so time is of the essence with that too

  • I can't wait for this loan forever, and I need the loan before I can start having children (dependants will affect my tiny borrowing power).

  • My other option is to give up everything I've worked for for years as a Sole Trader, and just get a full time job doing anything, so that I can get the loan I want, and fast. OBVIOUSLY I don't want it to get to that, because I'm proud of the business I have created.

Any advice? Thoughts? What would you do?
Would you keep chipping away at your own business that you love and have worked so hard to build and take the small loan so you can make your dreams of having a family come true? Or would you get a full-time job in any industry just to get the loan you wanted, give up everything you've worked hard for for so long, in order to do the same?

I'm just so torn.
For the record, I live in suburban Melbourne and I intend to stay here.

Financial

Comments

    • CryssieJade on 01/05/2022 - 12:04

      Thank you so much!! I'm so excited for my future. I'm just at a big fork in the road at the moment 😊

  • PixelPaul on 01/05/2022 - 10:42
    +1

    i am self employed and ended up getting a full time job just for my home loan which worked out better for me.

    • CryssieJade on 01/05/2022 - 12:05

      Thank you for your insight… I may still consider this path because as others have reminded me - it doesn't have to be forever.

  • snoopydoop on 01/05/2022 - 12:23

    Not sure how much this would affect loan capability, but is it possible to get employed part time as a photographer, as well as continue doing sole trading? Perhaps the stability of the part time work in addition to sole trader income may make you look more desirable?

    Eg. Work in a studio, company that does school/business portraits, wedding photography company, etc.

    Or even part time in an unrelated field.

    Just a thought to explore in terms of compromising between giving it all up vs not getting employment

  • serpserpserp on 01/05/2022 - 12:27
    +1

    My other option is to give up everything I've worked for for years as a Sole Trader

    How much money are you making? Because it doesn't seem like a lot if you can only borrow sub 200k. Is this low wage business really the life you want to continue?

  • [Deactivated] on 01/05/2022 - 13:17
    +8

    You're not going to want to hear this, but it appears that the things you want in this life (house, baby) are the 2 most expensive things in life, and your income doesn't suit that.

    You'll need to change your income, or, if it's improved, give it time to show the banks and get a higher loan amount.

    I mean people can survive on little amounts for sure, but from the looks of things, you'll end up in a severe lower socioeconomic state. Sometimes the better choice is not to have a mortgage, or do the right thing by you and your would be child and not have one to begin with. Or give up on dreams and get a job that pays well to afford everything you want.

    Unfortunately you may need to reevaluate your priorities.

    • rektrading on 01/05/2022 - 14:02

      You're not going to want to hear this, but it appears that the things you want in this life (house, baby) are the 2 most expensive things in life, and your income doesn't suit that.

      I can think of ✌ things that are more expensive. A 👜 or 👠 addiction or both.

      • OzCheapo on 01/05/2022 - 16:01

        Drug and alcohol addiction beats both

        • rektrading on 01/05/2022 - 16:09
          +2

          💊 and đŸș is actually very cheap in many parts of the 🌎.

          Genuine 👜 and 👠 in mint condition appreciate in value.

  • Daabido on 01/05/2022 - 21:51

    Maybe Labor will win and Albo can buy 40% of your house.

  • Cookiescream on 01/05/2022 - 22:59
    +1

    Hi OP, I live in Melbourne, on a similar situation to you. I managed to get my own place, as you know, with dependants would be hard.

    I am on a very non desirable neighbourhood, but it was where i could afford.

    So, if i was on your place, i would get a more stable income (and still photograph part time), get the place you want and then forward with the insemination, when your income is stable, because kids can throw such a spanner in the works and make things more difficuld. Good luck op!

  • Kranbone on 01/05/2022 - 23:15
    +3

    You seem very determined and resilient. I wish you the best success.

    In my experience, if you have very few options and they're all crummy, you don't have to take them.

    • CryssieJade on 02/05/2022 - 19:26
      +2

      Thank you - I needed to hear this too 😊

  • Lexar ANZ Chris on 02/05/2022 - 09:13
    +1

    I know it might sound crazy, but as a immigrant myself, I think it might be a good idea to seek places to live outside Australia. Not sure if you can still get paid what you were if you were working from other parts of the world.
    At least to me, living in a lot of places in Asia can be actually much cheaper than in AU.

    say…if you move to a smaller places in Japan, cost of getting a house is much much less than AU.

    Regardless, I admire your spirit. Please come back to OZB and let us know how you go.

    Good luck!

    • CryssieJade on 02/05/2022 - 19:27

      I was thinking of Perth, that's kind of another country…

      • Wasabi Ninja on 03/05/2022 - 18:28

        You wouldn’t thrive here in Perth. Less people means the market isn’t as big for professional photographers. However get a Perth based role in the mining sector and you’ll make over $100k no problems.

  • centrelink on 02/05/2022 - 11:02
    -3

    Don’t worry man, I made $2 mill in profits for my online store last year and I still struggle to get a $1000 limit credit card. Even kids that work in mcDonalds will have an easier time than I do.

  • fullmetal on 02/05/2022 - 11:15
    +4

    Get a full time job, get home loan, get preganant, get maternity leave, have children, quit job, back to operating small business.

  • xavster on 02/05/2022 - 11:50
    +1

    Hi,

    I don't know very much about your personal financial situation, but from what I can gather your main hurdle is your class of income (sole trader). Normally lenders require 3 months of payslips/documented income and some form of savings that shows consistency, which gives them the history to determine your ability to repay loans.

    May I suggest you visit an accountant and change your sole trader structure to a company structure. Then pay yourself as an employee and pay yourself 'consistently' as an employee. Most accounting firms will have an off the shelf shell company that can be activated for this purpose.

    The current economic situation will present 2 challenges. Lenders may start to use a higher serviceability rate (currently a 2.5% interest rate buffer) to assess your ability to repay the loan. This means the amount you can borrow may reduce in the near future as interest rates increase. However, because of this, real estate prices will also decrease to meet the market. So everything will balance out eventually. This does mean, that if you do buy now, your property (especially units) will not appreciate, and even perhaps depreciate in value. This will not be a problem if you intend to hold it long term (10+ years). If you are buying for the short term, then I would not recommend it. This is general advice and local specific real estate markets may differ so take it with a grain of salt.

    Best of luck!

  • Wasabi Ninja on 02/05/2022 - 13:03

    Don’t want to rent because it’s paying off someone else's house. Yet you’re 38 without owning a home already?
    So you’ve been living with parents for a very long time (hope you paid your way past 20) or you’ve been renting already?

    • Jason Genova on 02/05/2022 - 13:40

      living at home most likely - she says she has somewhere near 400k saved

      • Wasabi Ninja on 02/05/2022 - 14:52

        Where did she say that? She only makes about $45k and said she’s only been saving for a deposit for 4 years.

        • Jason Genova on 02/05/2022 - 15:15

          shes trying to borrow 200k to get a home, you do the math

          • Wasabi Ninja on 02/05/2022 - 15:25

            @Jason Genova: Could be looking to purchase an apartment. So the math would be that she’s not got $400k.
            A deposit of $400k looking for $200k, the banks won’t knock you back with that kind of equity.
            I started my apprenticeship at 16 and bought a house at 21. I’ve got 6 now and it’s not what I make that the banks are interested in when buying another house. It’s the equity I have in my houses. $400k for a $600k house. They’d be fine with that.

    • CryssieJade on 02/05/2022 - 19:32

      I moved back in 4 years ago to care for my Mum, who was going through some serious health issues. She's been cleared for a year now. Before that I lived and worked overseas for a while, and various sharehouses over a number of years. But I'm done with renting now.

  • suchan on 02/05/2022 - 14:48
    +1

    Not advocating for any political parties, but the first thing that come to my mind from reading your post was how Labor's proposed housing policy could potentially help you tremendously with your deposit where you'll be initially co-owning the property with the government. But yes, this depends on them being elected into office in the first place. Also depends whether you actually like the idea of sharing ownership of your home with someone else (albeit them being the gov).

    Another thing that comes to mind is, as you obviously love your work as photographer and based on what you have written thus far in comments, are pretty good at what you do, is to perhaps create another income stream through creating photography course / videos and sell it online? So you have dual income? Will require some hard work in the beginning and this won't help you with your short-term situation, but potentially it can be a sort-of passive income in the long run.

    I genuinely wish you all the luck you need and hope you will post an update for us with what you ended up doing and how it worked for you. Take care.

    • drfuzzy on 03/05/2022 - 01:07
      +1

      The devil is in the detail. Past housing affordability policies such as NRAS and the super scheme for FHBs had alot of fanfare and back patting but didn't help an awful lot of people. The cap at 10,000 per year is first red flag of trouble.

  • HCBargain on 02/05/2022 - 15:15
    +1

    I think the pragmatic answer is try and get a full time job with one of the banks. As a bank employee you get preferential loan rates, avoid having to pay any LMR, and can get into the housing market. Many roles can be done remotely these days too, so you could live somewhere that cost of living is more manageable, get more property for your money. Stick out the bank job as long as you can stomach it, but then once you're in the market you've got that foothold.

  • Jason Genova on 02/05/2022 - 15:16

    lol and how does a freelance photographer get a job at a financial institution?

    • HCBargain on 02/05/2022 - 16:29
      +3

      Takes about 35 seconds to find jobs advertised in Customer Service for any major bank. Ever heard of transferrable skills? Clearly someone who is a photographer has to be able to deal with the public, and is familar with technology. Someone who is freelance is good with time management and financial concepts.

      • CryssieJade on 02/05/2022 - 21:12
        +1

        A decent idea, cheers!

  • baldur on 02/05/2022 - 18:11

    Consider how thoughtless to raise a child without a father first. That's not starting a family.

    • Wasabi Ninja on 02/05/2022 - 19:20
      +1

      Two parents (same sex or opposite) is great. Plenty of single parents out there doing a great job though.
      Not sure where I sit on people choosing that for a child. I’ve been to fathers day mornings at my kids school and some kids have a grandfather turn up which is nice. Or sometimes an uncle.
      In this scenario I think raising a kid on less than $80k is insane and unfair. But people do that all the time too.
      It would break my heart not being able to provide for my kids and give them opportunities.

    • drfuzzy on 02/05/2022 - 19:22
      +3

      This comment is equally thoughtless.

    • cookie2 on 02/05/2022 - 20:57
      +2

      Ummm, by definition this is exactly a family.

      1.

      a group of one or more parents and their children living together as a unit.

  • Wasabi Ninja on 02/05/2022 - 19:16
    +3

    I’m just glad that the banks actually deny loans to people who clearly don’t have the means to deal
    with debt. If you’ve been denied, you need a good look at yourself and life.

  • drfuzzy on 02/05/2022 - 19:21

    You need more income.
    If you haven't been able to as sole trader get a job.

    • Yola on 02/05/2022 - 19:26
      +2

      Please read the comprehensive and clear post. The OP has a job but her income has been impacted by Covid.

      • drfuzzy on 03/05/2022 - 01:02

        Perhaps I wasn't clear. By job - Full Time job not "casual/self employed".

  • Darksirius on 02/05/2022 - 21:52
    +2

    Get a house with the $130k loan then have a baby. You know what you want already so I wouldn’t wait anymore, but you can adjust expectation regarding your dream home (it doesn’t have to be the first house you get!) or get a job that’s flexible.

    Just been through having a kid part recently so my point is to consider that the having kid aspect may not be smooth sailing. You can have no fertility issue and still take time to conceive. Some women get extremely ill during their pregnancy, and could barely function let alone work. You may have a velcro baby that cannot be put down literally anywhere, or sleep more than 45 minutes at a time or only on you for the first 3 months, if you’re lucky. Dealing with that with a partner is hard, but it would be harder by yourself, and your mom may only be able to help so much at her age. Just be mentally prepared that you may not be able to hustle as much once the baby comes. Good luck!

  • lawlieta on 02/05/2022 - 22:45
    +3

    You can do 4 days part time payg and 1 day and weekend on your photography work. Any payg work above minimum wage will get you more lending than 200k assuming your reported GLEE is below HEM.

    Once you’ve got a loan/ home you can reduce the hrs on the pt and switch more on ur biz if that is working out well.

    Its good you are passionate about photography definitely not an easy field of work to be successful especially how competitive it is.

    You have to understand good income to you could mean high revenue, but thats pointless if your expense is equally high, the only thing the lenders care about is net profit.

    I’m not sure if anyone has suggested this, but have you consider getting this unit as an investment property initially? A 2 bedroom unit assuming metro melb can get you 280-450 pw rental income (property price 300-700k range), point is in your pre approval you can lay this out and they’ll take into account of this rental income (shaded about 20%) this will significantly boost your lending capacity, at formal approval (unconditional approval) u r just required to provide rental appraisal on the property purchase which any real estate will offer for free to back it up.

    In mean time you can continue to live with ur mum or rent while earning the rental income that will pay off the property (70% of repayment min) or you can do a dodgy and just live in it now that you’ve got the loan, the initial loan will naturally be higher in Interest .5- 1% from big four but nothing stopping you from switching it to owner occupied this will not trigger a reassessment of your serviceability and you’ll simply get the lower owner occupied rate

    I will also mention as someone previously mention its all about equity, this is not true, her mums unencumbered property plays 0 role in the approval as all that does is assist with lowering LVR, long as its below 80/90 pc the banks dont care as all that matters is what interest you’ll get, how much you can borrow has and always will be based on the net income (after living expense and loan repayment) you can squeeze out and as your mother dosent work having her as a guarantor will not beneficial given once again as you mention you’ve got the required 20%++ deposit.

    Also as someone mentioned job keeper/ government support payments etc for a biz doesnt get brushed away in assessment, its taken in substitution of otherwise earned income, but this heavily depend on the credit manager and how comfortable they are with what you’ve presented, then again every bank is different in ridk appetite

    Disclaimer, not financial advice, but i do work in credit so thought I’d share.

  • charkwayteo on 02/05/2022 - 23:09
    +1

    Just buy any property you can afford. If it's just you and bub you don't need a house off the bat- But at least buying something now will get you invested in the property market and provide a secure place to stay…should the prices of property rise in the future at least you have your foot in the door.

    You will be debt free and able to save with an appreciating asset - then sell it later if you want to upsize.

    It's what I did, bought a studio in Sydney 2010 for 180k outright, used that as leverage + savings to buy a 2 bedroom apt sold both of em a year ago for a house.

    IF you want a house off the bat you'll have to get a full time job, banks want to see a steady income they don't give a hoot how much you have saved.

    Someone with 0 dollars in savings who earning a 200k a year salary paid weekly/monthly could buy a more expensive place than a person with 400k savings with no solid income.

  • FareEvader on 02/05/2022 - 23:42

    I would find a partner to share the responsibility and finances of raising a child and paying the mortgage.

  • bobolo on 03/05/2022 - 00:14
    +5

    You're 38. Think of the past 38 years - the things you've done, things you haven't done, time you've spent doing things you enjoy/don't enjoy, and times you've lived truly for yourself, or to appease others.

    Now consider this. Whatever you've experienced, you're going to get another crack at for the next 38 years - if you're lucky. This is essentially your second, and last chance, to create a life where at the end of the next 38 years, you have as few regrets as possible.

    I think the answer to all of your questions lie somewhere in that thought

    • drfuzzy on 03/05/2022 - 01:04

      Not sure why you were negged. It's a reasonable thing to think about.

    • CryssieJade on 06/05/2022 - 08:32
      +1

      All of this is exactly why I'm making big moves now. I have never regretted a single thing to this point. Always living my own dreams.

      And what I am moving towards is the next stage, eventually setting up for the final stage. I am poignantly aware of this 😊

  • OhNoUShiz on 03/05/2022 - 10:21

    Crowd fund. Many just simply crowd fund for whatever reasons you can think of.

  • knk on 03/05/2022 - 10:40
    +3

    Jesus, what a (profanity) of advice.

    You're shit out of luck if you don't have recent financials. You made shit money over covid? That sucks, but the banks aren't gonna be like yolo she's a good photographer here's more money.

    Make sure you're registered for GST.

    See what this financial year looks like, if it's not good wait another year. Low doc loan if needed, otherwise ANZ will take 1 year of sole trader financials. Recently refinanced with them.

    Then you're good to go.

    You could also see what else you can "bill" as part of your sole trader income. Ie can you work in another industry as a contractor to pad your income? It's all the same single ABN anyway. Hell even drive for uber, as long as it's not the bulk of your income you don't change your industry code or whatever its called.

  • josephk84 on 03/05/2022 - 11:33
    +2

    Also keep in mind that the home loan needs to come before the child. As soon as the banks find out you are pregnant (or have a child), your borrowing capacity drops by $200,000 per child. You could probably get pregnant and hide it for a bit but be sure to make purchases in cash otherwise they will see the transactions and may question them.

    • CryssieJade on 06/05/2022 - 08:36
      +1

      I definitely know this, which is why my first stop is a loan. Which I'm now actioning some things based on comments here, just some things I hadn't considered already.

  • Stevecro on 03/05/2022 - 14:17

    Don't have kids or a house, just be a life long bachelor and enjoy life

  • Andrewskates on 03/05/2022 - 15:06
    +1

    Assuming you're a pretty good photographer and creative, you could slow down your own business / keep it to weekends for extra money, and try land a full time job in a content studio or in house photographer somewhere. Do this for 3 - 6 months, get the loan.

    Once you're settled in your new place, then wind back up the business and continue.

    That sounds like the easiest path forward to reach the objective.

  • cyrax83 on 03/05/2022 - 17:21
    +2

    Get a full time job for a year, get the loan, get the place then have a kid.
    Also think about how you are going to support the kid and service the loan as a full time mum as well. Kids are fricken hard especially in the first few years. As a single parent, oh man! I can't imagine.
    You need to determine what's important to you - your job as a casual photographer or other things in life?

  • BatmanBeer on 03/05/2022 - 17:59
    +6

    You already have a lot of advice offered from various perspectives. I'll offer one from pretty much your perspective as a photographer.

    Source: I was a freelance photographer for over 10 years, and 8 years as a full-time inhouse photographer.

    If you're in Sydney, based on the going rates for a full-time photographer, it's going to suck. You will always be earning more money as a freelancer, but at the cost of no annual leave, benefits etc. You might not crack 6 digits, and very rarely will full-time jobs go above 80k. In the past, 80k might sound alot, but times have changed and unfortunately the industry salary hasn't changed with it. I don't see it changing any time soon unless you stay in the company and slowly have your salary increased annually.

    The most ideal situation, for me, in your position, considering your creative outlet, photography field, income and stability, is to strategise and potentially rethink how you are operating your photography business. Increase rates, change business practice, do less for more. Don't end up digging yourself a hole and lead yourself further into it. It will also make you enjoy your photography more. If you succeed in doing that, you will have more time for yourself, more time for your family, and more income.

    I ended up leaving the industry because it sucked the creativity out of me. I moved into a different industry and one year later, I am already earning WAY more annually than my 8 year career as a full-time inhouse photographer. The reason, is to preserve my creativity and enjoy it in my own time. It was also a decision I made for my family.

    • CryssieJade on 06/05/2022 - 08:40
      +1

      Thank you so, so much. Your comment is extremely valuable to me and my situation. I've started putting some things in motion. And I'm making moves to outsource the shooting of my existing clients for the remainder of this year, so I can focus on other income streams. It will buy me time to make a decision, or until I can find something full time (which, as you and I know, is really difficult in our industry!)

  • pompompom on 03/05/2022 - 20:54

    Your best bet will be pepper however you will pay higher rate.
    I doubt you will find anything under 700k in Melbourne. So unless a very healthy deposit means upwards of 500k (after adjusting for child related costs) in savings, it would probably be better to hold off untill you have significantly more saved.
    Considering you are a part time photographer and spent most of the last 4 years on govt payments I doubt that is case unless you have a sketchy side hustle.

  • KLoNe on 04/05/2022 - 05:13
    +2

    Wow. You have zero money and you want to have a baby you can't afford? Kid rekt

    • Wasabi Ninja on 04/05/2022 - 12:27

      Some people think it will solve being lonely. Others have cared for a parent and worry that they have no one to care for them. It’s all pretty sad.

      • pompompom on 04/05/2022 - 20:51
        +1

        But she has a "very healthy" deposit

        • Wasabi Ninja on 04/05/2022 - 22:09

          When really we all hope it’s a withdrawal first.

  • mmd on 16/01/2023 - 19:08
    +1

    What ru up to now? :)

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