IT Contractor - Loan needed

Discussion in 'Loans & Mortgage Brokers' started by varun80, 5th Dec, 2019.

Join Australia's most dynamic and respected property investment community
  1. varun80

    varun80 Active Member

    Joined:
    13th Aug, 2019
    Posts:
    35
    Location:
    Melbourne
    Hi

    I’ve recently started IT contracting and have a more than decent income. CBA is driving me crazy for lending me money. I already have 4 loans with them, deposit ready etc but they are asking for all sorts of docs ******* me off

    Can any mortgage brokers help or can anyone recommend any good brokers that make the process easy?

    Thanks
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    They all ask for a lot of documents these days. The CBA is good in that they have a fairly good policy for IT contractors but they also ask for quite a few documents that some other lender don't.

    There are also plenty of other lenders that may or may not be suitable, depends on your circumstances.

    Exactly how long ago did you start your current role? Is it a PAYG contract or via an ABN?
     
  3. varun80

    varun80 Active Member

    Joined:
    13th Aug, 2019
    Posts:
    35
    Location:
    Melbourne
    its via ABN Peter. I’ve now been contracting for 11 months thanks. All my banking history is with CBA so they can simply verify all my income and expenses, not sure why they are interrogating me.

    I’m also not happy with their rates on offer, thinking of refinancing to someone better
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,673
    Location:
    Australia wide
    You are self employed now if contracting. The general rule is that you must be doing it for 2 years or more for them to take into account your income. You would only have one tax return so far.
    But if you were previously in the same job you might be ok. They will be asking for loan statements for all loans and need proof of loan terms. Pretty standard stuff.
     
  5. varun80

    varun80 Active Member

    Joined:
    13th Aug, 2019
    Posts:
    35
    Location:
    Melbourne
    before last year I was on PAYG so wouldn't they consider that? If not does it mean i either switch to PAYG or wait another year on contracting?
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,673
    Location:
    Australia wide
    Yes they would consider that.
     
  7. varun80

    varun80 Active Member

    Joined:
    13th Aug, 2019
    Posts:
    35
    Location:
    Melbourne
    by they you mean CBA or some other lender you might be able to help with?
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,673
    Location:
    Australia wide
    CBA
     
  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,977
    Location:
    Canberra, Brisbane and Sunshine Coast
    That’s likely going to cause some issues - this is outside normal policy. However - having a history working in the same role previously will help.

    All banks are going to request a lot of paperwork these days - it’s not just a CBA specific thing. Especially for someone that’s transitioned recently from PAYG to self employed - a lot of lenders wouldn’t consider this application.

    Their rates are very good at the moment (you mentioned you weren’t happy with them) - especially if you have existing lending. You’ll get a decent rate on your existing loans and the new.

    Cheers

    Jamie
     
    Shahin_Afarin likes this.
  10. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    Liberty is also an option. They have a specific policy to consider previous payg income for newly self employed. Rates are a lot higher. Cba is where you need to be until you have the abn for two years and tax returns. If they annoy you use a broker and you won’t have to deal with them directly.
     
    codeninja and Shahin_Afarin like this.
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    The CBA's probably as good as it's going to get for the moment. This is a 'maybe', not a guarantee. As others have indicated, you're considered self employed. The standard is generally 2 years full tax returns reflecting the self employed period.

    The CBA may be able to make an exception to this due to your employment history. Most other lenders won't touch it and you'd have to wait until mid 2021. The non-conforming lenders that are okay with this would be quite expensive.

    The other alternative is to renegotiate your contract to switch to a PAYG contracting model. Get one payslip and then reapply. Quite a few lenders would be okay with this.
     
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Self employed people are a higher credit risk for recurring income. Broker advice will help. It is more complex. Many lenders have struct policies and little things like paying business costs by charge card seem like simple issues but can break a deal
     
  13. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,606
    Location:
    Sydney
    Mate CBA are the worst...they get you in and then make life difficult. PM and I can put you in touch with some other people....

    This should not be happening. I feel the majors are taking the **** at the moment....
     
  14. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    Speak to a broker to shop this around and get credit exceptions for you. Banks are hungrier to lend, your situation makes sense, and a few are willing to look favourably at something like this even if it falls outside standard policy. A fair bit of prelegwork required, but someone should be able to do the running for you and try and find a suitable solution.
     
  15. Matt Campbell

    Matt Campbell New Member

    Joined:
    7th Dec, 2019
    Posts:
    2
    Location:
    Australia
    I have to agree with the others. CBA are pretty full on and really only look after their high value customers. Your broker should help make the process as easy as possible. I send a link to my clients so they can log into their banking which provides all the bank statements I need.
     
  16. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,648
    Location:
    Sydney
    Is the client the same company? So for example you were working for Westpac as a PAYG and then they gave the option to work for them under an ABN arrangement. This carries a lot of weight with seeking an exception. You need to deal with a lender that has their own DUA. Ascertain the exception prior to submitting the application otherwise you will fry your credit file and make it harder for yourself to seek the exception.
     
  17. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,561
    Location:
    Adelaide, SA
    Have you got a P&L with matching BAS? This income similar to when you were PAYG?
     
  18. Catalyst

    Catalyst Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    310
    Location:
    Perth
    My better half is planning to jump on to the IT contracting bandwagon soon.

    However, we will have to do review of our loans soon. Interest-only loans for our IP is ending early next year.

    Should we sort out the refinancing before pulling the plug at current employment? The increase in income with contracting is significant though.

    Thanks.
     
  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,673
    Location:
    Australia wide
    Yes
     
    Catalyst likes this.
  20. Marty McDonald

    Marty McDonald Mortgage broker Business Member

    Joined:
    22nd Jun, 2015
    Posts:
    874
    Location:
    Sydney North Shore and Norther beaches
    Its kind of ironic that you thought cba was being unreasonable when in fact they are being the opposite. Most lenders espcially smaller ones would be a straight no in this scenario.