Buying a Home when you’re a Freelancer

27 Feb 2017

Purchasing a new home is an overwhelming endeavor. One has to prepare the paperwork, assemble a budget, embark on a search mission, and tackle unexpected problems down the road. To make it worse, lenders are cautious towards freelancers because their income fluctuates from month to month.  Getting a mortgage can prove to be a tough business, although this does not have to pose a major roadblock. With due diligence, the process can work in your favor. Thus, plan ahead of time and do the spadework before jumping into the homeownership adventure.

Numbers game

There is quite a bit of optimism in the real estate market, but freelancers tend to struggle to secure a home loan. They experience income volatility and borrowers are more guarded towards them. Indeed, it can be difficult to obtain a realistic assessment of the earnings, and as a result, freelancers have to jump through some extra hoops compared to the PAYG employees. So, self-employed buyers have a few options: To supply full financials, provide 12 months of BAS statements, or come up with a borrower certificate of income declaration.

This alleviates the uncertainty shrouding the freelancer’s finances. Beyond that, self-employed individuals should strive to keep good accounting and business records as well as a solid credit score.  Likewise, it pays off to have a savings history of at least six months. This goes a long way in ensuring that you enter the property market without the hassle. Furthermore, it is recommended to consult a home loan expert or your accountant prior to application.

That way, you will develop a deeper understanding of how much and from where you can loan. For instance, according to the Australian Bureau of Statistics, the average loan for first-time buyers in Melbourne is $335,000. Just do not forget to factor in home maintenance requirements and costs on top of the property value. What is more, there are homeowner’s insurance costs, as well as property taxes and other fees. Once you have all the facts, ask yourself whether it makes sense financially to buy a property after all.

Work it out

When you work from a comfort of your home, you do not have to worry about being close to work. The location is of secondary importance, still, you probably want a nice neighborhood with shops, schools, parks, and other amenities.  Try to envision yourself living in the area for at least 5 years. Buying a home is a serious, long-term investment, probably the largest you will make in life. Some people prefer renting and moving around a lot, while others want to settle down.

To figure out the best course of action, put together a list of reasons why you want to buy a home and ponder on what features your ideal abode must possess. Distinguish between must have’s and nice to have’s. In general, one of the most important features for freelancers is a dedicated workspace. On one hand, remote work is associated with many benefits including being your own boss and accomplishing a better work-life balance.

On the other hand, proper work conditions are paramount to climbing up the career ladder successfully. Therefore, pay close attention to the ergonomics of the home office in order to maximize your productivity and safeguard your health and well-being. Considering the time you spend in the home environment, it is advisable to pay attention to even the tiniest of detail and ensure that space reflects your taste, preferences, and work habits.

Finally, it is a good idea to conduct a home inspection and bring potential problems to light. In some states, pest inspection is obligatory due to the menace of termites, the notorious property damage dealers. Mold is another nuisance you would be wise to address. Some homes flood during heavy rains and create a favorable climate for it to take hold. Besides, the plumbing system should work like a charm, so keep your eyes open for any leaks.

Dreams and realities

Not having to cope with a daily 9-5 grind is a true blessing, but sometimes, it bears the burden of a curse. When buying a property, you have to provide more documentation than PAYG employees to get pre-approved for the mortgage. Then again, it is quite possible to fulfill your dreams of homeownership as a freelancer. Forward planning is the best shot you have: Stay on top of your finances, maintain a good credit score, and know what you want even before you commence the property hunt.


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