Do Lenders look for IT PAYG Contract End date for Loan

Hi,

Looking for some advice regarding my scenario of loan. I am an IT contractor with NSW Department of Education (full time not permanent) and have been working in Sydney from June 2018.

I work with NSE Dep of Education via Peoplebank who handles my PAYG. I always had rolling contracts of 6 months and some times 3 months, whenever the contract is extended. My current contract ends on Dec-2020. I am sure my contracts will get extended on end of december but will get extended contract only by end of december.

I recently found a House and Land package for 800k and would like to move forward with loan at LVR 90% to 95% so that I don't liquidate my savings and provide less deposit. I also have CBA pre-approval valid for next 6 months. the builder might provide the signed contract of Building and Land by October 1st week.

Will my loan be approved if I apply on october 1st week. I am bit worried will the contract end date spoil my chances. No debts or other loans, clean credit, annual taxable sal from contracting is 200k+. Looking for your feedback

 

Looking forward for your suggestions or if some has gone through similar situation.

 

Thanks Rolf, the house is 5-3-1 in 252sqm. What would you recommend for LVR. 90% seems decent?

 

I've got lots of clients who are IT contractors. If the contract is getting close to expiring, then lenders will often want to see a renewal contract, but otherwise it's not a big deal if you've already got a reasonable history to back it up. Employment history can easily be verified via things like previous contract paperwork, or PAYG summaries.

If applying today with employment contracted until December, it shouldn't be a problem. That said, in a brave new COVID world, things could easily change. Fortunately IT isn't as affected by the pandemic as much as many industries.

I agree with Rolf. House and Land packages do have a higher risk of being valued below the purchase price. It's usually fine, but the risk is higher than a purchase of an established house.

Also keep in mind that the LMI premium is significantly higher for a 95% loan when compared to a 90% loan. It's like borrowing an extra $3 and paying them back $1. You'll also pay for it in higher interest rates. This may be a moot point if you're purchasing under the FHLDS however.

 

Thanks Peter & Rolf for the detailed response. Certainly I have the backing up of previous contracts and PAYG summaries and work experiences, and I dont see the H&L contracts coming in before October 1st week, so fingers crossed. I will certainly look for the 90% LVR to minimize the LMI.

Not sure how the valuations will work out, but based on the sold history in Marsden Park, NSW (Elara Estate) for 5-3-1 double storey, 800k is less than whatever been sold there, I just went through the Real estate website sold properties list.

 

Can we get valuations for H&L package from lenders before signing the building contract. For example, builder gives the building contract to be signed with 5% deposit, can I request the banks for valuation and then sign the contract once i get positive response (valuation equal to builder cost). Is this something possible

 

Yes

 

Does this have any technical name to be requested with the lenders by the Mortgage brokers. Does CBA or NAB do this.

 

no name that i know of. yes and yes

 

Thanks Terry

 

Will the unsigned building contract be enough to get the valuation from lenders or do we need land contract as well for valuation. my understanding is with out signing building contract with 5% deposit, land contracts will not be given to us.