Navigating The Home Loan Application Process As A Casual or Contract Employee

Angela Moss0

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Australia has over 2.6 million people who are casually employed, according to the Australian Bureau of Statistics. And many will have aspirations to enter the home buying market.

Contractors can include people in roles as diverse as:

  1. Trades contractors, moving from site to site,
  2. IT contractors, assisting different corporations on projects or fixed-term periods,
  3. Project and change management contractors, helping businesses implement programs and transformations, and
  4. Casual employees, which are present in a lot of retail, hospitality, medical, manufacturing, and administrative work.

Many people have the preconceived notion that for casual workers and contract employees, getting a home loan is near impossible. While it can be a more complex process, you can achieve loan approval if you meet certain requirements.

In this article, we’ll arm you will all the information you need to boost your chances of qualifying for a home loan as an Australian casual or contract employee.

You’ll find out how much you can expect to borrow; what requirements you’ll need to meet; what type of loans will be available to you; and who can help to guide you seamlessly through the process.

So, if you’re a casual worker or contract employee, read on to put your best foot forward when applying for your mortgage.

How Is The Home Loan Application Process Different For Casual And Contract Employees?

Permanent, full-time and part-time employees generally have guaranteed hours, sick leave, and holiday pay. And if made redundant, they often have access to severance pay. People with this type of employment are referred to as pay-as-you-go (PAYG) in the mortgage finance space. In the eyes of a lender, a PAYG home loan is viewed as being more of a safe bet when it comes to repayments.  

Because of these factors, they’ll often have an easier time applying. And their perceived job security usually comes with more borrowing power and a lower interest rate.

When you’re in a casual or contract role, you can have irregular pay and limited or no access to leave and severance benefits. Due to this, lenders view your employment status as less stable than that of a traditional PAYG candidate. To be frank, they see lending you money to be a higher-risk activity. 

Therefore, when you decide to enter the home market you may have more to prove and fewer options available to you. Lenders will be looking for proof that you can make repayments. And most likely, you’ll be offered a higher interest rate to offset the risk to the lender.

Your options may be different from that of a traditional home loan applicant. But that doesn’t mean that options don’t exist.

What Types of Home Loans Are Available For Casual or Contract Employees?

The most common type of loan available for those with casual jobs and contracted roles is the low document home loan (or low doc home loan). The low doc home loan is designed for self-employed borrowers who can’t provide the same documentation as a PAYG candidate, or full document loan applicant. It’s also used for borrowers who don’t have a predictable, regular income, like casual and contract employees.

Some lenders also have specific casual employment, or unusual employment loans that apply for casual and contract employees.

Because these home loans are for borrowers perceived to be more of a risk, they usually entail:

  • Potentially, a lower loan to value ratio (LVR), which is the percentage of the property value your loan equates to. This means you may need to save a bigger deposit, depending on your individual situation and the lender.
  • A higher interest rate to offset the risk to the lender.
  • Different/additional documentation than a traditional PAYG home loan.

You’ll also find that you may have fewer lenders and home loan options to choose from. That’s because certain options are only open to those considered to be low to moderate risk. And increasingly, some lenders, particularly in the post-pandemic world, won’t take on higher-risk loans. 

But this doesn’t mean your Great Australian Dream should be relegated to the bin. Sure, it can be a less straightforward process to get a loan. But if you meet certain requirements, accurately assess your financial situation, and know where to seek help when you need it... You can make it happen.

And just as there are banks that are shying away from what they consider to be high-risk loans. There are lenders out there who understand that the modern work landscape is changing. Irregular hours, contracts, freelancing, and the gig economy are increasing in the Australian workforce. And for some industries like retail and hospitality, having a casual position is the norm.

What Home Loan Products Can I Expect?

Regardless of your casual employment status, or low doc loan application, these types of home loan products could be available to you (dependent upon the lender): 

  • Fixed-rate home loan - This loan provides a fixed interest rate for, commonly, 1-5 years. If you want to avoid rising interest rates, then this is a good option.
  • Variable-rate home loan -  Your interest rate will change, depending on the Reserve Bank of Australia (RBA) cash rate and financial outlook. This is a good option for those that don’t want to be locked into a rate.
  • Home equity loan - For those who want to use the equity of an existing property as collateral. 
  • Construction loan - If you’re planning to build, this loan can assist in saving on interest during construction. 

What Requirements Do I Need to Meet To Qualify For A Home Loan?

The exact requirements you’ll need to meet are dependent on the specific lender and their credit criteria policies.

What will a lender want to see?

Lenders will typically look for the following:

  • History is more important in casual roles, with lenders preferring you to be in a contract or casual role for more than 3 or 6 months ideally.
  • If you have changed roles or companies recently, the lender or bank will look at the past work history and want to see you working in that job type for a number of years. For example, your history as a project manager going back for 2-3 years plus.
  • Proof of a steady level of contract or casual income, usually via tax return documents such as an Australian Taxation Office (ATO) Notice of Assessment (NOA) document, which shows assessable income. Ideally, have the last 2 years of NOA documents ready.
  • Proof you’re in a decent financial situation, such as having an adequate deposit, a good credit score, and the ability to meet your living expenses.
  • Employment consistency, such as holding the same job from 3 months to several years. Different lenders accept different timeframes. However, the longer you have been in a job typically the easier it is to qualify.
  • Many lenders are willing to overlook gaps or starting in a new role, as long as there is good casual and contracting income that can be proven over 1-2 years. As the saying goes “show me the money”. If you have those official records of your earnings, you can expect a common-sense response from the bank or lender on your home loan approval.

What Documents Will I Need To Provide For The Home Loan Application Process?

As it states in the name, a low doc loan requires less documentation than a traditional or full doc home loan. However, the more you can provide to document your income, the better. Lenders will usually want to see the following documents to prove your income:

  • 2 years’ worth of ATO NOA documents.
  • 2 years’ worth of PAYG Summaries, otherwise known as Group Certificates. If you are a contractor using an Agency like Hays, Aurec, Ranstad, Robert Walters, and Chandler McLeod, these agencies will “payroll’ off an annual certificate for you.
  • 2 most recent PAYG payslips to evidence your income.

What If I’m Newly Employed As A Casual Or Contract Worker?

If you have a new job in a casual or contract capacity, some lenders will accept between 3 to 6 months of employment in that role. The lender will typically calculate your year-to-date (YTD) casual income with either of the following:

  • Payslip/s from your current employer, which shows three months of YTD income.
  • A PAYG Summary, a tax Notice of Assessment, and a payslip/s showing less than 3 months’ YTD income.
  • A statement from your current employer showing the length of employment and YTD income, in addition to a tax return and PAYG summary.
  • Bank statements showing 3 months of salary deposits into your account.

Exactly what documents the lender will accept and the timeframe they’ll be looking into depends on their individual policies and requirements.

Note that you may incur a higher interest rate on your loan if you’re newly employed.

How Much Will I Be Able To Borrow?

Typically, your borrowing power will be around the same as that of a PAYG applicant. Often in casual and contractor roles, your income can be higher as a result of that type of employment structure, which is positive for the borrowing perspective.

How much you can borrow depends on several factors such as your overall income, total financial health, how long you’ve been employed, and if you’re after an owner-occupied or investment property loan.

However, which of these categories you fall into will determine how much you can borrow:

  • I’m in a very strong financial position, have been employed for 12 months and above, and/or I have a guarantor - You may be able to borrow 95% and above of the property value.
  • I’m in a good financial position and have been casually employed for 6 months to a year (dependent on the lender) - You may be able to borrow 90% of the property value.

If you’ve been employed for less than 6 months to a year, or you’re applying for an investment property loan, your borrowing power is lower. This is because lenders see you as more of a risk when it comes to making repayments. That means you’ll need a bigger deposit to qualify.

As a low doc applicant, if you borrow more than 70% of the property value, you may be required to pay for Lender Mortgage Insurance (LMI), depending on lender policies. This protects lenders from losses related to defaulted loan repayments. Also, it allows lenders to approve loans that may not have been possible before, due to the risk profile.

Disclaimer: Note that the above percentages are general estimations only. The exact amount you can borrow depends on your individual situation, the current financial climate, which lender you choose, and their policies and requirements.

At YouBroker, we calculate this for you as part of the online mortgage service and verify and pre-assess it against lender policies.

How Can I Boost My Chances of Qualifying For A Home Loan

There are things you can do to increase your chances of success when applying for a casual or contract employee loan.

Save a Decent-Sized Deposit

The heftier your deposit is, the better you look to banks and lenders. A larger deposit shows that you can save, and manage your money well.

Maintain a Healthy Credit Score

Having a good credit score proves to lenders you can make repayments and you’re financially reliable.

Stay in the Same Job or Industry

Having a consistent employment record lowers potential risk in the eyes of lenders. They can view fluctuation in your career as a potential risk.

Keep good tax records and get the last 2 years ready

As a contractor or casual, and whether you are PAYG’ing your income, or using a Trust or PTY company, make sure the income hitting your personal Tax File Number (TFN) is up to date. That means ensuring your personal tax filings are completed and available during the home loan process.

For those contracting and using PTYs or trusts, ensure your personal Individual Tax Return (ITR) and company tax returns are up to date and cover the past 2 years ideally.

When applying for an unusual employment loan, it’s a good idea to consider hiring an accredited mortgage broker, like YouBroker. They can make the often stressful and convoluted process easier for you.

How Can A Mortgage Broker Help Me Get A Loan As A Casual Employee?

Applying for a home loan as a casual employee can make you feel like a lost babe in the woods. There are a lot of different pieces of the puzzle to think about. If you’re feeling overwhelmed you could consider hiring a mortgage broker to do the legwork for you.

A mortgage broker, such as YouBroker, that is experienced in servicing casual and contract employees, can help you navigate the process in the following ways:

  • Find you the best interest rate to save you money.
  • See if you’ll require LMI, which provides risk mitigations for lenders.
  • Identify lenders who offer home loan products suitable for your casual and contract employee status.
  • Help you to navigate the real estate buying or refinance process, so you know what to expect on your homeownership journey.
  • Work out your borrowing power with different bank and non-bank home loan providers.
  • Provide guidance on required documentation, deposit amounts, and budgeting to improve your chances of qualifying.

Mortgage brokers have insider knowledge of which lenders are more likely to consider your loan application. Having a mortgage broker on your side can save you time and money. And make the whole process easier.


Buying a home while in a casual or contract role is absolutely possible. By applying all the above tips your chances of qualifying for a home loan can be greatly improved. Depending on your individual situation you may have to plan ahead to get there. But your dream can definitely be in your sights.

And if you are confused, have faced rejection before, or simply want to save time and money... Employing the services of a mortgage broker, like YouBroker can help you reach your goals.

Next Steps

Looking for a mortgage broker? YouBroker can help you take the guesswork out of applying for a home loan as a casual or contracted employee.

Whether you’re looking to purchase or refinance, you’ll be able to quickly compare loans and access support throughout the whole process.

At YouBroker, we believe accessing mortgage broker services should be convenient, efficient, and timely. That’s why we offer an online service so you can start the process on your own terms, and at your own pace.

Our fully licensed team has the experience to assist you to find the right mortgage for your individual needs.

Check out how you can get started with YouBroker here:

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