How to Get Finance With Unusual Employment
An increasing number of people are choosing flexible working opportunities with their employers, as it enables them to successfully combine both their lifestyle arrangements and their family commitments.
However, many have found that when it comes to visiting their local bank branches while looking for a home loan, car and truck loan or even equipment finance, their local bank is still apprehensive towards them. And, it is because of their irregular working hours:
1. They don’t seem to fit into the strict lending guidelines set out by banks; and
2. They are not seen by banks as holding down a stable job with a regular income.
What the Common Unusual Employment Types?
Here are some of the common unusual employment types:
1. PAYG (pay-as- you- go) contractors
2. Casual workers
3. Part-time workers
4. Self-employed individuals
6. People with other forms of income
Type 1 – PAYG Contractors
PAYG contractors are normally employed via an agency or directly via their employer. This form of employment is now common in a variety of fields such as:
>> IT (Information Technology);
>> Project Management;
>> Construction; and
So, if you are a PAYG contractor and you are looking for finance, here is a list of things that lenders/credit providers will require you to provide:
1. You will be required to provide a copy of your most recent “Employment Contract”, with income details listed;
2. You will need to provide evidence that you have a minimum of 12 months employment in the same industry and that you have a good track record in your chosen industry; and
3. You will need to provide evidence that your employer or employment agency takes care of your income tax and superannuation contributions for you.
Note: If you are not on the direct payroll of an employer or employment agency, you may be treated as being self-employed.
Type 2 – Casual Workers
This type of employment applies to people working on a casual basis in the following industries:
3. Teaching and Tutoring;
7. Drivers; and
If you are a casual employee, you will need to provide evidence that you have been employed at the same place for at least 6 months.
Lenders/credit providers will calculate your average earnings over a set period, and count this as your income. However, if you want to work out your own average earnings, then you can use an income annualisation calculator to calculate your own average earnings.
Type 3 – Part-Time Employees
If you are employed on a part-time basis, you will find that lenders/credit providers will generally require you to:
1. Provide evidence that you have been employed at your current place of employment for at least 6 months: and
2. Provide copies of the following documents:
>> Current computerised pay-slip covering a minimum of two (2) pay cycles in order to confirm details of your base income; and
>> PAYG Summaries; or
>> A signed letter of employment from your employer listing details of your current base-remuneration.
Type 4 – Self-Employed Individuals
You are self-employed if you run your own business. You are categorised as self-employed individual even when you are conducting freelance work as a journalist, photographer, tour guide, etc. In such a situation, you will find that most lenders/credit providers will require you to provide evidence that you have a regular income to sustain a loan. This includes providing evidence that:
1. You are a business owner or partner;
2. You have been trading in your current business for at least 24 months;
3. Your business provides a steady income; and
4. You will be required to provide copies of:
>> Your most recent Personal and Business Income Tax Returns, and
>> One set of the business financial statements, reflecting two (2) years trading activity
Note: If you conduct freelance work with an employer, you may find that lenders/credit providers may require you to provide a copy of the written agreement between you and the employer that outlines your pay and conditions.
Type 5 – Sub-Contractors
Sub-contractors have specialized skills and they are generally employed by a primary contractor to provide specialized services in a variety of fields such as:
1. Building and Construction;
3. Civil Engineering; and
4. IT (Information Technology).
Note: Many sub-contractors have little to no overheads and no staff and most are typically self-employed. In a sense they are similar to PAYG contractors.
Type 6 – Other Forms of Income
If you receive any other form of income and you are unsure if it is acceptable to lenders/credit providers, you should seek help from a qualified and licensed finance broker or a mortgage broker. You can even seek financial and legal advice from your accountant and solicitor. These other forms of income can include:
1. Centrelink payments;
2. Commissions and Bonuses income;
3. Trust Distributions income;
4. Car Allowances;
5. Annuity Income from Superannuation;
6. Director’s fees;
7. Second Job income;
8. Investment income (i.e. Dividends received from publicly listed companies); or
9. Court Ordered Maintenance payments.
Seek Expert and Professional Advice
If you still have doubts regarding your employment status and want to obtain finance, you can seek help of a finance broker. You should opt for a professional qualified finance broker because he/she will have experience of dealing with many lenders/credit providers on a regular daily basis. Also, he/she will be familiar with the lending guidelines and credit policy requirements of a number of lenders/credit providers.