Contractors account for 8% of all workers in Ireland, according to various sources. The appeal is understandable: you have more freedom in terms of what jobs you take on, your hours are much more fluid, and you may be able to accumulate more income which is dictated by the field you engage in.
If you’re a contractor seeking to purchase a home, you might be wondering if you’ll be able to get a loan. The quick answer is yes, however obtaining a loan may be more difficult. You may not even have regular and constant pay stubs to demonstrate evidence of stable income, unlike a normal wage job. It might be difficult to track your pay when you work on a contractual basis, making it more difficult to explain your financial status to your creditor.
Know your budget.
You must first determine your budget before beginning the mortgage application procedure. In order for to do that, y You’ll need to consider how much of an investment you can manage as well as your repayment ability. When determining how much you can actually pay, online mortgage calculators are a helpful tool.
Deposit
You will be required to pay a deposit when purchasing a home. This is a percentage of the total cash buying price. First-time purchasers should expect to spend 10% of the purchase price in cash, while 2nd time buyers could expect to pay approximately 20%.
Repayment Capacity
Borrowers cannot get more than 3.5 times their yearly wage, according to the Irish Central Bank. Banks have considerable leeway in this area, and a knowledgeable mortgage broker may be able to assist you in raising the limit.
The Application Process
During the home buying process, you will be required to demonstrate that you are a reliable individual with good financial behaviors. They would want to see that you can pay the house and that you have money left across each month. This will show the lender that you are a well-qualified borrower. The mortgage lender will evaluate your application based on a number of factors. You’ll need to fulfill some common standards if you’re a contractor or a Payroll employee.
Lenders will typically see you as a potentially risky customer if you don’t have a stable, constant source of income. This is relevant even if you work in a field where there is enough of work and maybe you are paid well.
Typically, lenders would like to see a contractual history, that have a minimum of 12 months’ history and 6 months left on the existing contract. Alternatively, other financial institutions may be able to take into account a continuous track record of working in that area for a few years, which can be useful if the borrower has transitioned from full-time to contracting but continues in the same company. Some lenders are far more liberal in how they assess income, especially if the contractor is a bread winner or if the lender is pursuing the IT industry, where contracting is popular.
