Mortgage Advice for a recently arrived contractor and partner?

[Gothnet]

Hey folks,

I just thought I'd ask, does anyone have any advice on a good way to go about getting a mortgage?

We arrived in Aus last August, I started work as a contractor in November (for the same UK company I'd been working with for a year before that, and I've been contracting in the UK for ten years), my partner started a perm role in February. We've got about a 33% deposit on the sort of house we want, and have approached a broker. They managed to find two lenders who would even consider us, and we chose to apply for pre-approval on the one offering about a 4% variable rate. When the preapproval came through, they'd bumped it up to 6%, which is pretty outrageous IMHO, and eats up most of the slack in our budget (which I had allowed because I think rates are going to keep rising for a while). So we can't really accept it as if rates continue to rise we could be pretty screwed!

My bank (ANZ) said they would be open to discussing mortgages after we have a complete tax return, which means July (not far now) but I was wondering, does anyone have any suggestions of other banks/brokers/organisations which might be worth a try?

At this point there's a lot of muttering about price drops so maybe it's in our interest to hang on anyway. Rent isn't cheap, but at about half the mortgage payments (if we took on 6%) it's also pretty sustainable and we can save each month at the moment...

[Ausvisitor]

Your history in the UK makes little difference to banks here so the fact you contracted for the same people in the UK is irrelevant, doubly so when you highlight the fact that you were not working for them from Aug-Nov - essentially signposting, this income is volatile and not guaranteed.

Once you have a tax return (and a contract with at least 6 months to run under your belt) you will be in a good place to get a mortgage. However your best bet might be to dip into permanent employment, get the mortgage then go back contracting.

Also you don't say what visa you have, if it isn't PR then you will have this sort of rate discrimination until you get to PR.

Good luck, but honestly you aren't the first to get here and realise mortgages aren't as easy to get your hands on (at decent rates) as they are in most other countries

Edited May 25, 2022 by Ausvisitor

[Gothnet]

I mentioned the UK history because both ANZ and the lender for our current offer have asked about it, and in the case of the lender they specifically requested business and personal tax records from the UK going back a few years to show I was able to consistently generate income.

It may not be relevant to most mainstream lenders, which is why I was asking if anyone knew of any specialist brokers that may be worth approaching. We're both PR.

If there are none, no worries.

[Ausvisitor]

I've not heard of any, there are plenty that would look at you if you had three years of Oz contract experience and would be throwing cash at you, but right now you'll struggle

 

(I advise FSI clients, and despite helping them derive their investment decision rules, they still won't look at giving me a loan until I've done 9 months in post)

 

[Ausvisitor]

Bit of a technical answer here to expand on above.

ANZ may offer mortgages but, like almost every other retails bank, they don't underwrite them.

Where as in the UK (and most civilised societies) a decision in principle is worth something, over here it just means the bank would look at you. Until you submit an actual application the underwriter mortgage houses (who have names you wouldn't normally see on the high street) have no idea about you and unless you meet their criteria they will turn you down even though the bank has said yes

I don't know what the mitigation to this is, but just wanted to let you know a decision in principle is absolutely worthless in Australia

[Gothnet]

The advice I was given was that the pre-approval process we have been through is indicative, rather than a contractual commitment, but it's exactly the same in the UK.

I've had HSBC UK walk back on a mortgage offer after they agreed in principal because they suddenly decided at the point I had put an offer on the house, that my income was about a third of what was evidenced to them previously. So I went to a broker with more experience of contractors and got a mortgage through the UK's largest lender just fine.

We've gone for approval with LaTrobe due to our circumstances, I have no idea if they underwrite their own stuff, but they are at least willing to deal with us at this stage.

I'm not honestly seeing Australia as any worse than other countries here, and I have no particular expectations due to our circumstances. Again, I'm just asking if anyone knows if there are any specialist brokers for contractors and/or new arrivals, rather than looking for reasons it might not work, I have enough of those already!

Edited May 26, 2022 by Gothnet
typo

[Marisawright]

18 minutes ago, Gothnet said:

I'm not honestly seeing Australia as any worse than other countries here, and I have no particular expectations due to our circumstances. Again, I'm just asking if anyone knows if there are any specialist brokers for contractors and/or new arrivals, rather than looking for reasons it might not work, I have enough of those already!

It's unlikely.  The big four Australian banks have gone out of their way to destroy other players in the mortgage market over many years.  

[welljock]

On 26/05/2022 at 05:18, Ausvisitor said:

Your history in the UK makes little difference to banks here so the fact you contracted for the same people in the UK is irrelevant, doubly so when you highlight the fact that you were not working for them from Aug-Nov - essentially signposting, this income is volatile and not guaranteed.

Once you have a tax return (and a contract with at least 6 months to run under your belt) you will be in a good place to get a mortgage. However your best bet might be to dip into permanent employment, get the mortgage then go back contracting.

Also you don't say what visa you have, if it isn't PR then you will have this sort of rate discrimination until you get to PR.

Good luck, but honestly you aren't the first to get here and realise mortgages aren't as easy to get your hands on (at decent rates) as they are in most other countries

That might not work, typically the banks won't lend unless you have finished your probationary period (usually 6 months). My son got caught out by that, (stupidly) if he had been on a casual contract he would have been fine.