but if I were an employee I could be made redundant with four weeks notice and no redundancy payout, isn't being a locum therefore more reliable!?!?
Being self employed you could be liable for a stuff-up, get sued and lose the property - maybe unlikely but possible. Probably not the case as employee.
Being self employed, as you say you are much more mobile (read unstable). In times of lack of work you are probably more likely to find yourself another job than a less motivated "employee" might, however you may also be even more motivated to skip the country and leave the debt behind, and that debt is likely to be business debt on top of property debt. An employee is more likely to only have the property debt.
The bank has an inherent distrust of business lending unless the business has been going for more than 10 years. Stats show a high proportion of businesses fail in the first 5 years. As an employee you are the first to be paid, but as the owner / self employed, you are likely to stop paying yourself when times get tough & therefore loan repayments are at risk. You are also more likely to hang on for a long time to try to salvage the business, whereas an employee is likely to move on pretty quickly if they are not being paid.
An employee doesnt generally have other higher priority (claim on the assets) bills (than loan payments), whereas for the self employed, the IRD generally gets first take (and maybe ACC), which may put the banks in second place if times get tough. That is not a position they like to be in.
The self employed may generally have a higher gross income, but also have lots of additional expenses, Tax, ACC, Insurance, vehicle, tools / equipment, advertising, accounting, general business costs, registrations / licenses and trade memberships, bad debts/ slow payers, business loan payments separate from property loans etc. I guess the complexity of assessing the risks involved with each of these put them in the too hard basket, much easier to deal with a simple wage or salary earner.
So while on the face of it, it seems crazy that an employee is more favoured than the self employed in terms of lending risk, perhaps all the potential risk factors around the self employed have a higher likelyhood of impacting the loan.
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