Can I Get a Home Loan with Side Hustle Income in Australia?
In today's gig economy, many Australians are supplementing their primary income with a side hustle. Whether it's freelancing, selling handmade goods, or driving for a rideshare company, this additional income can be a valuable asset when applying for a home loan. But how do Australian lenders view side hustle income, and can it help you secure a mortgage? In this post, we'll delve into how side hustle income can be used in the home loan application process and provide practical advice on how to strengthen your application.
In This Article
Understanding Lender Criteria for Side Hustle Income
When applying for a home loan, lenders assess your ability to repay the loan by examining your income stability and creditworthiness. In the case of side hustle income, lenders in Australia typically require that this income be consistent and documented over a period of time. Generally, lenders look for at least two years of consistent income from your side hustle to consider it as part of your total income. This demonstrates reliability and stability, which are crucial factors in loan approval.
Documentation Is Key
To have your side hustle income considered, you'll need thorough documentation. This includes:
- Tax Returns: Provide at least two years of tax returns showing your side hustle income. This helps establish consistency and legitimacy.
- Bank Statements: Offer bank statements showing regular deposits from your side hustle.
- Invoices & Contracts: Keep records of invoices and contracts with clients, if applicable, to further substantiate your income.
Practical Tips for Strengthening Your Application
1. Keep Accurate Records: Ensure all your side hustle income is accurately reported in your tax returns. Lenders will scrutinize these documents, so accuracy is vital. 2. Improve Your Credit Score: A higher credit score can improve your chances of loan approval, even if your side hustle income is not fully considered. 3. Reduce Debt: Lowering existing debts can improve your debt-to-income ratio, making you a more attractive borrower. 4. Increase Savings: A robust savings account can serve as a buffer and demonstrate financial responsibility to lenders.
Common Mistakes to Avoid
- Overestimating Income: Be realistic about how much your side hustle contributes to your income. Overestimating can lead to issues if you face a financial audit.
- Neglecting Tax Obligations: Ensure you’ve paid all necessary taxes on your side hustle income. Unpaid taxes can complicate your financial standing with lenders.
How Esteb and Co Can Help
At Esteb and Co, we understand the nuances of securing a home loan with side hustle income. Our experienced mortgage brokers can guide you through the process, ensuring your application highlights your full financial picture. We offer personalized advice, helping you gather the necessary documentation and advising on strategies to improve your application.
Frequently Asked Questions
Q: Can I use my side hustle income as my only source of income for a home loan?
A: While it's possible, it's challenging unless your side hustle income is substantial and well-documented over several years. Lenders prefer a combination of primary and secondary income sources.
Q: How long do I need to have been earning side hustle income to include it in my application?
A: Most Australian lenders require at least two years of consistent side hustle income to consider it in your loan application.
Q: Are there specific lenders that favour applicants with side hustle income?
A: Some lenders may be more flexible with side hustle income, but it's crucial to work with a mortgage broker to find the best fit for your situation.
Q: Can seasonal side hustles be considered by lenders?
A: Seasonal income may be considered if it shows a consistent pattern over multiple years, but it's usually less favourable than year-round income.
Q: What if my side hustle income fluctuates significantly?
A: Lenders prefer stable income. If fluctuations occur, providing a detailed explanation and showing an overall upward trend can help.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.