Are you self-employed? It's a small detail that stops 4.1 million Aussies from getting a home loan

The self-employed – or gig economy workers – often struggle to get home loans. However, mortgage brokers and lenders say there is no reason why they can’t secure finance.

When Victoria Kingsbury wanted to take out a home loan, friends and colleagues told her it would be much harder if she was self-employed.

Kingsbury was working in lifestyle magazines as a freelance writer and subeditor and so decided to take a job to ensure she and her partner could secure home finance.

“I just tried to preempt any difficulties and I thought I’d be better off in a permanent position,” she says.

So she took a permanent job last October and, while she doesn’t regret the career move, it was a wrench at the time.

“It was a difficult decision because I’ve got two young children and I was working part-time. I felt like I had to weigh up the benefits and obviously the impact on my family,” she says.

“I felt like I didn’t have much choice,” says Kingsbury, who has since secured finance and is currently house hunting.

It’s a common misconception that the self-employed – or gig economy workers – struggle to get home loans.

However, mortgage brokers and lenders say there is no reason why the self-employed can’t secure finance.

UNO/" id="">How much can I borrow?

Use UNO's calculator to estimate your borrowing capacity.

Calculate Now

The rise of the gig economy

Rather than taking a permanent job with a single employer, the gig economy involves doing work for a range of employers at the same time or doing short spells of contract work, moving from company to company.

It has been facilitated by the rise of platform websites such as Uber, Freelancer, Airtasker and 99designs and the spread of mobile internet connectivity.

Estimates of the number of participants vary widely.

The Grattan Institute estimated that last year fewer than 0.5% of adult Australians or 80,000 people work on peer-to-peer platforms more than once per month. At the other end of the spectrum, a study commissioned by job platform Upwork estimated the number of Australians undertaking some form of freelance work rose from 3.7 million in 2014 to 4.1 million in 2015.

What is clear is that gig economy work is growing around the world. Financial software company Intuit estimates that contingent workers will make up over 40% of the US workforce by 2020.

Tim Bowcock, head of partnerships at mortgage broker UNO, says while there is no reason gig economy workers can’t get a loan, sometimes they won’t have payslips or tax returns to verify their capacity to repay.

“From a loan approval perspective, a key differentiator is if someone is working an ABN or not. Someone might work at various employers on a part-time or casual basis but as an employee rather than under an ABN,” he says. “Or they could work as a freelancer with an ABN where they cut an invoice to the person they’re working for.”

Those who operate via an Australian Business Number might need a ‘low doc’ loan, which involves providing bank statements from the past 12 months, recent Business Activity Statements (BAS) or a letter from their accountant verifying their income if they haven’t got two years of tax returns to show the lender.

“It’s exactly the same loan in some cases. The difference is how the lender verifies income and approaches approval,” Bowcock says.

Victoria Kingsbury wishes she had known more about her borrowing options before she changed her employment arrangements. Consistency of income is important. However, in some circumstances banks might lend less to a gig economy worker than to someone in permanent employment, perhaps 80% of the value of a property rather than 90 or 95%. They might also charge a higher interest rate, though not always. ANZ, for instance, charges the same rates in both cases.

Pepper is a specialist lender which is more open to lending to people who don’t meet the traditional loan criteria.

David McClatchey, business development manager at Pepper, says the lender has smaller minimum timeframes for people to have been self-employed, compared with the two years that banks usually require.

“We could help someone that has a new ABN or a new business from a minimum of six months’ ABN registration,” he says. “They could use six months of business bank statements of six months of BAS to verify the income and that would be enough for us to support them.”

McClatchey says a key consideration is the consistency of the self-employed worker’s income.

Pepper is open to different ways of verifying income. If a worker is on a short-term contract, for example, a letter from their employer stating that the contract is likely to be renewed is helpful.

He says Pepper charges different interest rates for traditional and low-doc loans – typically about 30 basis points more for a low-doc loan – but doesn’t differentiate between those in permanent employment and the self-employed when it comes to setting interest rates.

Victoria Kingsbury wishes she had known more about her borrowing options before she changed her employment arrangements.

“In hindsight, I don’t know if it was the right decision because it seems that the amount that we can borrow isn’t really all that different anyway,” she says. “In terms of getting a mortgage, I don’t think it really made an awful lot of difference in the end.”

Tips for securing home finance for the self-employed:

  • Keep working

Lenders like to see that the self-employed have been earning a steady income for at least 12 months if they are working under an ABN. So, you may be eligible for home loans with potentially lower rates if you wait it out.

  • Have a clean credit history

Make sure that you have been paying your bills on time and don’t run your credit cards right up to the credit limits. Also, don’t apply for finance and different loans too often in the 12 months before you seek your home loan. All of these things can hurt your credit score and, ultimately, your ability to get a loan.

  • Check your collateral

Lenders assess loans based on the ‘Four Cs’ – character, collateral, capacity to repay and capital position: how many assets a person has. If a borrower is lacking in one of these areas, they could make up for it in other areas – for example by having a larger deposit or other assets.

  • Have clean bank statements

It’s good to have ‘clean’ bank statements that don’t show every withdrawal you have made over the past 12 months, so pay a set amount into a separate bank account each week to make withdrawals from.

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles


What our customers are saying

Sally Mackenzie
February 19, 2024
We chose Uno Home Loans from their impressive web site knowing we were going to find it hard, on many fronts, to qualify for a home loan. We were incredibly fortunate to be assigned Mike Parsons as right from the get-go, despite the complexities, he hit the ground running for us. He was incredibly knowledgeable, with years of experience but what was immediately apparent and impressive was that he was totally invested in getting us over the line, doing absolutely everything possible, including working around the clock. Despite it being a relatively small loan in the order of things, Mike never missed a beat, getting docs ready, following up and answering every request from the proposed funder immediately. He kept us informed on progress the minute anything happened, and again if anything needed to be done, he was right on it. In short, we highly recommend Uno, and Mike, knowing what a remarkable job he did, over many weeks, to get us our loan. He got us a great deal, with far better rates than we expected, so we couldn't be happier. In fact, without doubt, you'd be hard pressed to find a more personable, sharp, hard working, dedicated professional who clearly prides himself on getting his customers standout results.
Read more
February 13, 2024
Scott and his team were just A-mazing. We felt supported through the whole process with the greatest quality and care. Every question answered right in time, or even before we asked. The process was smooth and we got the best outcomes we could have wished for.
Read more
Angela Biddle
February 6, 2024
Our mortgage recently came up for renewal, and with interest rates skyrocketing we were looking for ways to minimise the impact. Michael and his team were proactive and attentive. Michael spent time with us to understand our circumstances. He found mortgage options that worked with our current financial situation and longer investment plans. He presented clear options, providing guidance where needed. He and his team were helpful and responsive - streamlining the process and keeping us updated through the negotiations. In the end, Uno did the heavy lifting and secured a significantly better rate than our current bank offered, all with friendly, personal service. We would highly recommend UNO Home Loans.
Read more
Fotis Bikas
January 15, 2024
I cannot help but congratulate Scott Wilkinson of UNO Home Loans for being an absolute credit to both his company and the entire loans industry. Scott is a truly rare gem of a broker in that he will not only go the extra mile to achieve for each customer the very best deal, but his knowledge of all and sundry within the industry is unsurpassed (you will see what I mean if you speak to him). Additionally, Scott has a clear passion for imparting his wealth of information with each customer, whereas the conversation with most other brokers would simply be over if they could not get you the best deal. For me, Scott Wilkinson of UNO Home Loans stands head and shoulders above the competition and I feel privileged to benefit both from his expertise and professionalism whenever it is time for a refinance or new loan.
Read more
Tomoharu Matsui
January 11, 2024
Michael Parsons helped me a lot when it's difficult to establish my capabilities in loan.
Read more
Gillian Kearon
January 9, 2024
I highly recommend Mike Parsons as a mortgage broker. I couldn't fault the service provided by UNO. Thanks Mike!
Read more
Taner T
December 20, 2023
Thank you Eren Tan for the amazing service and support. Our Loan was a little tricky and complex for other lenders but Eren managed to get it over the line in record time. His professionalism and dedication to our needs was exceptional. If you need a Loan no matter how complex your situation, make sure you contact Eren at UNO Home Loans.
Read more
Karaipu Brown
December 20, 2023
Buying & selling a house at the same time is very stressful but Scott Wilkinson from UNO home loans made sure we knew what was happening & took most of the stress away. He always kept us up to date and if we had a concern or wanted clarification on something we were able to call him, if he didn’t know the answer straight away he will find out and contact us back.. now we are enjoying our new house and turning it into a home :)
Read more
Chris Anderson
December 18, 2023
Just completed my first loan with UNO which was so much easier than with other other brokers I have used in the past. Our broker MIKE PARSONS always had time for me and broke things down for me in the simplest of terms and was very patient with my silly questions and my constant changing of plans. I wish I had used them in the past as I wouldn't be in the situation I'm in now. Can't recommend them highly enough. Thanks UNO and Thanks MIKE 😊
Read more
Stephen Broomfield
December 11, 2023
To be able to recommend Scott Wilkinson for your mortgage broker was a privilege. We had deals fall through but Scott supported, guided and stuck with us, proper partnership. The whole team at UNO helped us and supported us right through to after settlement. Made sure everything was correct and how we are progressing. Communication was amazing and straightforward and easy to understand. Transparent. We can not Recommend Scott and the team as Uno high enough. Use UNO with confidence.
Read more
Tarek Hussain
December 6, 2023
Can't thank Amy enough for her hard work, dedication and determination on getting multiple loans completed for me. I wouldn't hesitate in recommending Amy and the Uno team to any of my associates. Will definitely be back in the near future!
Read more
November 3, 2023
If you’re looking for a trustworthy, thorough, reliable & knowledgeable Mortgage Broker then you must call Anita Callaghan! I can’t even imagine how stressful this process would’ve been without her. Anita went above and beyond to make sure she answered every question, responded to every text (even on weekends/after hours), and followed up on every detail to ensure we had all the info we needed. Anita is a true people person who is warm, empathetic, kind and supportive. You can tell she loves helping people and loves what she does, which is probably why she’s so good at it! Can’t thank you enough Anita, or recommend you more highly! You’re the best!
Read more