Hit A Home Run

There are three key rules to follow to get a mortgage when you don’t have a traditional work pattern

- Nicola Field

More than one million Australians are swapping the 9-to-5 grind for the freedom of the gig economy, picking up work from a variety of freelance jobs – from driving for Uber to designing websites. Add a further 1.27 million people running single-operator businesses and it’s easy to see how the world of work has changed.

Like all self-employment, the gig economy can be rewarding from both a lifestyle and financial perspective. The downside can come when you want to buy a home.

“Generally speaking, it has always been more challenging for self-employed workers to secure a home loan, as it can be difficult to demonstrate a stable income and continuity of employment,” says Susan Mitchell, CEO of Mortgage Choice.

A 2017 report by non-bank lender Pepper Money found that 26% of Australians who had been knocked back for a loan were refused because they were self-employed or worked part time. The thing is that working for yourself doesn’t have to spell the end of home-buying dreams. It just means you may need to take a few extra steps to become home-loan ready.

Phil Gallagher, mortgage broker with Aussie Belmont in the Lake Macquarie region in NSW, says that around one in three of his home-buying customers is self-employed. The good news, according to Gallagher, is that self-employed borrowers can usually access the same loans and lenders as home buyers working for an employer – often with a deposit as low as 5% – as long as they meet all the usual income and affordability requirements.

That said, Gallagher recommends following three key rules of thumb: “Have your tax returns up to date, show that you’re earning a profit and keep things simple.”

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