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2.19%

Fixed - 3 years

2.45%

Macquarie Bank

$1.3k

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.57

/ 5
More details

2.74%

Fixed - 5 years

2.62%

Macquarie Bank

$1.4k

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

2.63

/ 5
More details

2.29%

Variable

2.33%

Mortgage House

$1.3k

Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied

3.47

/ 5
More details

1.98%

Fixed - 1 year

2.38%

Homestar Finance

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.46

/ 5
More details

2.06%

Fixed - 3 years

2.38%

Homestar Finance

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.66

/ 5
More details

2.18%

Fixed - 1 year

2.58%

Homestar Finance

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.15

/ 5
More details

3.02%

Variable

3.05%

Yard

$1.4k

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

2.18

/ 5
More details

Learn more about home loans

Many Aussies opt for freelance work in areas ranging from journalism and event management to information technology and healthcare consulting. While some of them earn well, they may not get paid on a set day of the month or week, as full-time corporate employees do.  

Such irregularity in receiving income can be an issue in getting a home loan for freelancers, and most lenders may only offer lower loan amounts. If you’re a freelancer looking for a home loan, remember to ask the lender for their view on your income and the steps you can take to assure them that it’s stable.  

On what terms can I get a mortgage as a freelancer?

When you apply for a home loan as a freelancer, lenders may only offer you a limited loan amount. Especially if you can’t submit at least two years of tax returns. Lenders check tax returns, especially for freelancers, to gauge a regular income. Different lenders assess your income through different calculations, for instance, by taking the average of the income reported on your tax returns for the last two years.

Some lenders may estimate whether you can afford loan repayments by calculating the debt service ratio (DSR), or the part of your earnings available for repaying your home loan. If your DSR is well above the lender’s acceptable range, your application can be rejected.

Lenders will also ask you to prove that you have the savings for the deposit, which your bank account statements can help confirm. You will probably need to submit three or six months’ bank statements, depending on the lender. If you don’t have the savings to pay a deposit of at least 20%, you may still have a few options available to you.

One option is to buy lenders’ mortgage insurance (LMI), which protects lenders in the case you fail to repay your home loan. Alternatively, you can show that you have at least 5% of your home’s value in “genuine savings” saved in your bank account or a term deposit in the past three months.

Apart from having a steady income and the savings to make a deposit, you will need to prove you have the borrowing power to repay the loan. This tells a lender about the risk they face of not getting their money back from you. You should remember that borrowing power isn’t just about your credit rating but also has to do with any debts you are yet to repay in full. If you have taken out a car loan or have outstanding credit card debt and are struggling to pay the repayments, that can suggest you don’t have much borrowing power. Consider asking your lender about their method for assessing your borrowing power.

You may find lenders more willing to approve your home loan application if you can show you are self-employed rather than a freelancer. The critical difference is that, as a self-employed worker, you’ll have to submit proof of registering for an Australian Business Number (ABN) as well as financial statements. If your annual business earnings are more than $75,000, you will need to show you are registered for GST as well.

How much can I borrow if I apply for a home loan for freelancers?

So you have the right income documents, adequate savings, and high borrowing power, and the lender approves your home loan application, but how much can you borrow? The lender will calculate how much you can borrow as a percentage of your home’s value, which is called the loan-to-value ratio (LVR). For instance, your home may be worth $500,000 with an LVR of 80% it means you can borrow $400,000. 

The LVR offered on a home loan by your lender varies with your specific circumstances. You should remember that if you borrow more than 80% of your home’s value, lenders will ask you to pay for Lenders’ Mortgage Insurance (LMI). LMI protects the lender if you’re unable to repay the home loan. Here are some of the loan amount choices available to freelancers:

  1. LVR of 80%: This may be the most convenient option if you can prove you have the income and the deposit. You won’t have to pay LMI, and you may get a better interest rate.
  2. LVR of 90%: You will need to pay for LMI if you want to borrow 90% of your home’s value. Lenders may also scrutinise your home loan application more thoroughly, and you’ll need to show you have significantly high borrowing power. The trade-off for paying a lower deposit will probably be a higher interest rate.
  3. LVR of 95%: Lenders may accept a 5% deposit if you have genuine savings, which can be the amount saved in the last three months in your bank account or as a term deposit. Depending on the lender, a gift from your parents or inheritance may also count as genuine savings. Again, you should have an excellent credit history and low outstanding debts as well as a steady income.
  4. LVR of 105%: This would be a special case like a guarantor home loan which requires a guarantor, typically a family member who takes responsibility for repaying the loan if you can’t. You may not need to pay LMI for a guarantor home loan, which can bring down the cost of the loan. Additionally, once your outstanding loan amount drops below 80%, the lender may waive the guarantor requirement. However, this loan type may only be available for first home buyers.

Not all lenders offer all of the above options, and even when they do, the qualifying requirements can differ. It is advisable to research available loan options, from different lenders, before shortlisting a few lenders. You can discuss your specific circumstances with these lenders, and only then apply with the lender offering the most suitable home loan terms for you.

How can I reduce the costs when getting a mortgage as a freelancer?

As a freelancer, you should remember that some lenders may not let you borrow at all, and getting your home loan application approved can require a lot of work. The cost of the home loan can also vary based on the location of your home. For instance, if your home is in a newly developed area where property values are still not finalised, lenders may charge you more for the home loan. Again, if you borrow a sum that includes upfront costs such as stamp duty as well as the cost of your home, you may have to pay more for the home loan.

When applying for a home loan, you may be concerned about the interest on the loan. But you also need to consider other costs which vary based on the amount you are borrowing. For instance, if you borrow more than 80% LVR, you will need to pay for LMI. This can cost you a few thousand dollars, depending on the loan amount. Finding a lender who offers no or low LMI home loans for freelancers can save you a significant sum of money. 

Monitoring your credit history, and ensuring you have sufficient borrowing power can get you better interest rates. If you’re currently repaying a short-term loan through large monthly instalments, you may not have much savings left. Consequently, your borrowing power will be lower. The ideal situation is one where you currently have very little debt, including credit card debt, but a rich history of borrowing and repaying money on time.

Depending on the lender, you may also be able to negotiate the interest rate on the home loan. Most lenders have multiple home loan products on the market, whether it’s their Standard Variable Rate (SVR), a fixed rate or a discounted rate for new customers. Compare the offers in the market and discuss with different lenders if they would be willing to match the competitors offer. If you’re taking out a home loan to buy your first home, check if you qualify for a first homeowner grant which can lower the amount you need to borrow, reducing the cost to you.  

Freelancer mortgage calculators: what do you need to know?

A mortgage calculator, sometimes also called a serviceability calculator, can help you find ways to lower the cost of your home loan. Those applying for a home loan for the first time may use these calculators to understand their home loan better. When using a mortgage calculator, you’ll usually need to input the cost of the home, the proposed loan term, possible interest rate and type of interest and possibly the repayment frequency. 

Using a calculator, you can check how choosing an interest-only home loan affects the interest you will pay. Choosing to pay back the principal of your loan at a later time can increase what you pay for the home loan in total.  However, for freelancers, such a setup may help with cash flow, plan your savings and make sure you have enough money in the bank to take care of the larger repayments down the track.

For those working freelance, mortgage calculators can help you see if you can reduce the interest rate by making lump-sum payments. Or see if scheduling your repayment in a way that suits you affects how much you pay for the home loan.

Some mortgage calculators use the same method as many lenders for calculating home loan costs. Which means you may get a realistic estimate of your mortgage repayments. Also, the online mortgage calculators on lenders websites usually include lenders’ fees and service charges, making it easy to shortlist lenders. However, you should remember that the calculations online are not based on your exact situation. You’ll need to discuss your circumstances with the shortlisted lenders before deciding on a suitable home loan. You could also consult a mortgage broker or advisor before approaching a lender if you are unsure of the offers or are facing unusual financial difficulties.

Can freelancers get home loans through a mortgage broker?

For those working freelance, mortgage brokers can be helpful in several ways, most crucially in ensuring that you apply for the most appropriate home loan with the right lender.

With the perspective and experience of an industry insider, they can guide you through the home loan terms offered by different lenders. And then based on your income and savings and suggest a lender likely to offer a suitable home loan. Mortgage brokers can also advise you on approaching a non-bank lender, if necessary. 

Some of the questions you may have as a freelancer that mortgage brokers can answer, include:

  1. How does a negative incident on your credit history affect your chances of getting a home loan?
  2. If you are working on a long-term project but one with irregular payment cycles, will lenders consider your income as unstable?
  3. Should you consider a lender’s recommendation for borrowing more than 80% LVR, which involves paying LMI?
  4. Can the mortgage broker recommend a low or no LMI lender?
  5. When should you consider applying for a guarantor home loan?

Frequently asked questions

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

How can I get a home loan with bad credit?

If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.

One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.

Two points to bear in mind are:

  • Many home loan lenders don’t provide bad credit mortgages
  • Each lender has its own policies, and therefore favours different things

If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.

Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:

  • You have a secure job
  • You have a steady income
  • You’ve been reducing your debts
  • You’ve been increasing your savings

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

What if I can't pay off my guaranteed home loan?

If you can’t pay off your guaranteed home loan, your lender might chase your guarantor for the money.

A guaranteed home loan is a legally binding agreement in which the guarantor assumes overall responsibility for the mortgage. So if the borrower falls behind on their mortgage, the lender might insist that the guarantor cover the repayments. If the guarantor fails to do so, the lender might seize the guarantor’s security (which is often the family home) so it can recoup its money.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

How much can I borrow with a guaranteed home loan?

Some lenders will allow you to borrow 100 per cent of the value of the property with a guaranteed home loan. For that to happen, the lender would have to feel confident in your ability to pay off the mortgage and in the security provided by your guarantor.

How can I pay off my home loan faster?

The quickest way to pay off your home loan is to make regular extra contributions in addition to your monthly repayments to pay down the principal as fast as possible. This in turn reduces the amount of interest paid overall and shortens the length of the loan.

Another option may be to increase the frequency of your payments to fortnightly or weekly, rather than monthly, which may then reduce the amount of interest you are charged, depending on how your lender calculates repayments.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.