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I'm in IT, I go on contracts that range from 3-6 months, but they have a termination clause of 2 weeks usually. I earn $900 NZ per day.

How lenient would a bank be on lending say $400K to me, which I can combine with say 100K of my own money towards a house?

I'd be looking at 30 year mortgage so small repayments of $1,463.39 (according to ASB).

I'm interested in their general policy on contractors & if there's any change I can make to improve my chances, interest rate etc.

Thank you

  • Because you don't have employment through one company they may want to have several years worth of documentation. I don't know I there are nodoc mortgages that require no proof of income. – mhoran_psprep Sep 7 '13 at 15:50
  • Yes in New Zealand. (Well I'm working in Aus atm, but going home soon) Interesting, I'm guessing consulting yields a more favourable reception then. – Baconbeastnz Sep 8 '13 at 1:36
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I am only familiar with American banks, but generally speaking, they will work with you if you can demonstrate that you have an adequate average income over a period of time. It is likely they will want a record of your income for at least the last 24 months (more would be better). The terms of the individual contracts (i.e. termination clauses, etc.) shouldn't be important as long as you have a demonstrated history of making a good income.

I'd recommend finding a bank that performs manual underwriting, i.e. they actually have someone on staff that will look at your credit history, income, debt ratios, as opposed to them just generating an offer based on a computer model. Lending standards can vary quite a bit from bank to bank, and you have not listed your average annual income, so it is difficult to say whether they will offer you a mortgage, or for what amount, but you have a significant down payment. However, assuming that your numbers are good and that you can find someone intelligent to work with, it's unlikely that they will deny you simply because your income is uneven.

Best of luck!

  • Great answer, thanks JAG! getting a picture of it all. – Baconbeastnz Sep 10 '13 at 23:21
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Note: I am in the UK. I don't know specifically about australia but I expect the general principles will be much the same everywhere.

What banks want is to be reasonablly confident that you have a steady income stream that will continue to pay the mortgate until it completes.

In general employed are fairly easy to assess. Most employed people will have a steady basic pay that increases through their career. Payslips will usually seperate-out basic pay, overtime and bonuses. There is little opertunity to cook the books.

The self-employed are harder to assess. Income can be bursty and there are far more opertunities for cooking the books to make it look like you are earning more than you really are.

So banks are likely to be far more careful about lending to the self-employed, they will likely want to see multiple years of buisness records so that any bursts, whether natural due to the ebbs and flows of buisness or deliberatly created to cook the books average out and they can see the overall pattern.

A large deposit will help because it reduces the risk to the bank in the event of a default. Similarly not being anywhere near your limit of affordability will help.

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