Home loans for contractors and independent contractors

Payslips, a current contract, and evidence of continuous contracting, usually twelve months or more, sometimes with the same or a similar client. Lenders assess the income like salary, often at 100 per cent, but want to know the contract end date and the likelihood of renewal. A contractor on a rolling six month contract with three years of renewals is a strong file. A contractor on a first three month contract is not, unless they are moving from employment in the same role. Some lenders treat all contractors as self-employed regardless, so lender choice matters.

Invoicing directly, the contractor is a sole trader for lending purposes: two years of tax returns on full doc, or BAS and bank statements on alt doc. Income is the net profit after expenses. Contractors with few expenses and steady invoicing have clean files. Lenders will look at client concentration, because a contractor with one client for five years can look like an employee to the ATO and like a risk to the lender if that client ends the arrangement.

Contracting through your own company puts you in the director assessment: company financials and tax returns plus personal returns, with your salary, dividends and share of retained profit combined. The company's expenses and any retained cash matter. This is the most paperwork, and also the structure that lets lenders see the full picture of what the contract earns.

Keep contracts, renewals and invoices organised. Show continuity: gaps between contracts are the main thing lenders probe. Have the latest return lodged. Use a lender whose policy fits your contracting type rather than one that forces you into a self-employed assessment you do not need. Specialists know which lenders take PAYG contractors at full value and which discount them.