Home loan employment requirements: How you can get a home loan with a casual, part time job, self employed

The post Home loan employment requirements: How you can get a home loan with a casual, part time job, self employed appeared first on Oak Laurel.

Getting a mortgage can be both confusing and time consuming.  Home loan lenders all have different policies surrounding who they will accept as a borrower, which can make the process even more difficult.  The easiest way to find a lender who is likely to accept your home loan application is to talk with a  Mortgage Broker such as Oak Laurel.  Nevertheless, many people like doing their own research before making enquiries, and this article will explain in depth at the different types of employment, time required in your job and other conditions acceptable to lenders

What employment is generally accepted by home loan lenders?

Generally, most home loan lenders will accept the following types of employment:

• Full time permanent
• Part time permanent
• Casual work
• Self-employed
• Government benefits and investment income are also usually accepted as an additional income source.

An in depth look at the different types of employment.

Full time and Part time permanent.

Full time permanent employment is generally considered the most reliable and stable income by lenders, which improves your chances of getting approved.

How long do I need to be employed full and part time?

Whilst there are exceptions to most rules, the majority of lenders require that you have been in your job for 6 months and are not on probation.  If you have not been in your job for 6 months, many lenders can still accept your application if you have been in the same industry for at least 2 years.  Commonwealth Bank of Australia is also a notable exception to this rule, accepting 100% of permanent income from day 1 – requiring a payslip or employment contract as evidence.

Other acceptable income whilst working full time or part time.

As well as your base salary, most lenders are happy to look at proven income from:

• Overtime – usually needs to be evidenced and averaged over 12 – 24 months. Lenders will generally only accept 80% of this income when looking at your affordability.
• Bonuses and commissions – should be evidenced over 2 years.  Lenders will generally only accept 80% of this income when looking at your affordability.
• Company car – 100% of your car allowance is usually allowed so long as it is permanent and ongoing.  If you are provided a fully maintained company car as part of your contract, many lenders will add $5,000 onto your income when calculating your affordability.

Casual Employment

Casual employment is often considered riskier by most lenders, with their lending criteria being stricter.  Nevertheless, your income will be accepted by lenders if you can prove a regular income over a acceptable time period.  An exceptions to this rule is Bank of China, who generally will not lend to casually employed borrowers.

How long do I need to be employed as a casual?

Most lender will accept casual employment once you have been with the same employer for either 6 or 12 months.  There are options if you have only been employed for 3 months on a casual basis.

Self-employed

Self-employment is often a high-risk high-reward affair for many people, and the banks look at it in a similar light. Self-employed applicants can often be very appealing to lenders, however they will first want to see that your business is stable and provides you with a consistent income before they are willing to give you a home loan.

What is I don’t have 2 years of tax returns?

Low-doc loans are for applicants that either:

• Have been self-employed for 12 – 24 months (not all lenders accept 12 month ABN).
• Have been employed for over 2 years but don’t have the financials for a full two years.

Low doc loans are available from many lenders, and generally only require your last 4 BAS statements and an “affordability statement” from yourself and/or a Certified Accountant’s letter.

How long do I need to be self-employed for?

For the vast majority of lenders, 2 years of self-employment will be required, often with 2 years’ or financials to be provided before they will consider your application for a discounted rate.

What if I have been self-employed for less than 12 months?

If you have been self-employed for less than 12 months, there are still options available, however you will likely have to go to non-banks and alternate lenders.  Liberty financial will lend to borrowers who have only been employed for 6 months, whilst Bluestone will go as low as 3 months, although they will want a strong employment history in the same industry prior to you starting out under your own ABN.

Special considerations for certain professions

Whilst this only applies to a select few people, some banks will often give special considerations for people working in the following field:

• Medical sector – Doctors and other medical professionals can get a loan at 90% LVR without paying Lender’s Mortgage Insurance with some banks.
• Fire Fighters and Teachers – minimum employment requirements are significantly reduced for Fire Fighters and Teachers of they apply for their home loan with Firefighters Mutual Bank and Teachers Mutual Bank respectively.
• Police Officers and their families – QBANK, formerly Queensland Police Credit Union, is committed to helping Police Officers and their families financially.  QBANK often has great home loan offers available exclusively to eligible members.

Other acceptable income types

Most banks will also look at other forms of income including, but not limited to:

• Centrelink income – including Family Tax Benefit A and B, aged pensions, disability pension and widow pensions.
• Child maintenance – lenders will often look at the age of the children, with maintenance for children over 14 years (or younger, in some cases), generally not being acceptable.
• Investment income – including rent, dividends and share trading.
• Super on a case-by-case basis.

Conclusion

Lenders will look at a lot of variables when deciding to approve your home loan, with each having their own opinion on what is acceptable.  Whilst the above should give you a good idea on what is needed regarding employment, it is always recommended you speak with a professional Mortgage Broker.

Disclaimer:  Whilst we aim to ensure all information is up-to-date, lending policies are constantly changing.  We take no responsibility for the accuracy of this information after the date of publishing.  Always seek professional advice before making a credit application.

AUTHOR: Zak Avery

BIO:  After studying Chemical and Metallurgical Engineering at The University of QLD, Zak spent 6 months in Real Estate, before moving to Gladstone to begin a career as a Mortgage Broker.  In early 2017, Zak moved back to his hometown of Brisbane to start his own business: Blue Fox Finance.

The post Home loan employment requirements: How you can get a home loan with a casual, part time job, self employed appeared first on Oak Laurel.

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