What Not to Do When Buying a House as a Tradie

Tradies make solid money, but lenders don't always see it that way.

You might be clearing six figures on paper, but if your tax returns show half that because you've claimed every deduction going, the bank sees you as a $50,000 earner. You might have cash in the bank from recent jobs, but if your ABN shows irregular income or gaps between contracts, a lender flags you as high risk. The biggest mistake tradies make when buying property is assuming their income tells the full story. It doesn't. What shows up in your application tells the story, and if that story doesn't match what you actually earn, you'll either get knocked back or approved for less than you need.

Don't Apply Before You Know What You Can Borrow

You can't bid on a property until you know your borrowing capacity.

Most tradies look at what they bring home each week and figure they can afford a certain repayment. Then they apply and find out the lender will only approve them for $400,000 when they need $550,000. The property they wanted is gone, and they're back at square one. Your income on tax returns is what counts, not your gross turnover or what you invoice. If you've structured your business to minimise tax, you've also minimised what the bank thinks you earn. Before you start looking at houses, get pre-approval so you know exactly what you're working with. Without it, you're guessing.

Don't Assume All Lenders Treat Tradie Income the Same

They don't.

One lender might assess your income using two years of tax returns and average it out. Another might only look at the most recent year. A third might accept a letter from your accountant showing your actual earnings before deductions. Some lenders won't touch self-employed applicants unless you've got two full years of ABN history. Others have programs that accept one year, or even alternative documentation if you're coming off a PAYG role and recently went out on your own. If you apply to the wrong lender, you'll get declined or offered a lower amount, even though another lender would have said yes. The difference between lenders isn't just the interest rate, it's how they calculate what you can afford in the first place.

Don't Skip the Offset Account to Save on Fees

An offset account isn't optional if you run uneven cash flow.

Tradies get paid in chunks. You might invoice $30,000 one month and $8,000 the next. If that money sits in a transaction account earning nothing while you're paying interest on a $500,000 loan, you're throwing away thousands. A linked offset reduces the interest you're charged by the balance sitting in the account. If you've got $20,000 in offset, you only pay interest on $480,000. That saves you real money every month without locking up your working capital. Some lenders charge a small fee for offset accounts. Pay it. The interest you save in the first year will cover the fee ten times over.

Don't Lock in a Fixed Rate Without Understanding Break Costs

Fixed rates look solid until you need to get out early.

If you fix your rate and then need to sell, refinance, or pay down a lump sum before the fixed period ends, the lender will charge you break costs. Those costs can run into tens of thousands of dollars depending on how far rates have moved since you locked in. Consider a scenario where a chippy fixes $400,000 at 5.2% for three years, then wins a big commercial contract and wants to pay off $100,000 early. If variable rates have dropped to 4.5% in the meantime, the lender will charge him for the interest they're losing over the remaining term. That bill might be $12,000 or more. A split loan structure where you fix part and keep part variable gives you flexibility without gambling the whole loan on rate movements.

Don't Use a 95% LVR Loan Unless You Have To

Borrowing more than 80% of the property value triggers Lenders Mortgage Insurance, and it's not cheap.

LMI protects the lender if you default. It doesn't protect you, and you're the one paying for it. On a $500,000 purchase with a 5% deposit, LMI can cost anywhere from $15,000 to $25,000 depending on the lender. That's added to your loan amount, so you're paying interest on it for the next 30 years. If you can scrape together a 10% or 15% deposit instead, your LMI drops or disappears entirely. Some tradies qualify for LMI waivers through specific lender programs, but you need to ask. Most brokers won't bring it up unless you're working with someone who knows the tradie space.

Don't Forget That Your Car Loan Cuts Your Borrowing Power

Every dollar you owe somewhere else is a dollar the bank won't lend you for a house.

If you're paying $800 a month on a ute, that's $800 a month you can't put toward a home loan repayment in the lender's eyes. A $40,000 car loan can reduce your borrowing capacity by $150,000 or more depending on your income. If you're serious about buying, either pay out the car before you apply or factor it into your pre-approval and adjust your property budget down. You can always upgrade the ute after you've settled. Trying to do both at once just shrinks what you can borrow.

Don't Apply for a Home Loan the Same Way You Applied Five Years Ago

Lending standards change, and they've tightened.

What got approved in the past won't necessarily get approved now. Lenders assess your expenses more closely than they used to. They look at your actual spending, not just what you declare. If your bank statements show $4,000 a month going out on living costs, the lender won't accept your claim that you only spend $2,500. They'll use the higher figure, and that reduces what you can borrow. They also scrutinise debt more carefully. If you've got a $15,000 credit card limit, they assume you've maxed it out, even if you haven't. Close unused cards and pay down existing debt before you lodge your home loan application. It makes a measurable difference to how much you can access.

Don't Wait Until You Find the Perfect Property to Get Pre-Approval

Pre-approval isn't just a formality. It's your buying power.

Without it, you're browsing. With it, you're a buyer. If you find a property you want and you don't have pre-approval, you're either making an offer subject to finance and hoping the seller waits, or you're rushing an application and risking a decline because you didn't have time to fix the issues in your file. Get your pre-approval sorted before you start seriously looking. That gives you time to clean up your bank statements, close unnecessary accounts, and make sure your tax returns support the income you're claiming. Getting loan pre-approval also shows you exactly what you can afford, so you're not wasting time looking at properties outside your range or missing opportunities in your actual price bracket.

If you're ready to apply or you want to know where you stand, call one of our team or book an appointment at a time that works for you. We'll tell you what lenders will actually approve, not what you hope they might.

Frequently Asked Questions