Bank employment policy: how it may affect your home loan application

18 Sep 2018

ThinkstockPhotos-657826420-jpg-735x450.jpgIf you don’t fit the typical employment type, it can feel like an uphill battle trying to find a lender who will accept your application, compared to a standard, full-time employee.

However, not everyone works a standard, 9 to 5 job, so some lenders are becoming more open to catering for a wider range of employment types. The key is to know the lender who will give you the best chance at approval!

At Peard Finance, we get asked a lot about bank employment policy and how people can best position themselves for home loan approval, so we’ve broken down some of the most frequently asked questions below.

So, how long do you have to be in your current job to be considered for a home loan?
This typically depends on the type of employment you have, whether it be permanent, fixed term contract, casual and so on.

Permanent employees (full or part time): the good news is that with the right lender, you only need to be employed for 1 day and can still be on probation! 

If you have a limited deposit and the loan is mortgage insured you may need to be in the role for 3-6 months or have previous experience in the same role. 

Fixed term contract: some lenders treat fixed term contract similar to permanent employees. Before providing a loan, some lenders will request that you have a minimum of 3 months left on your current contract period or have some evidence which suggests that the current contract will be renewed.

Casual employees: you will generally require a minimum employment period of 6 to 12 months, but a couple of lenders are comfortable with 3 months in the current role.

To calculate the income most lenders will average the year to date income shown on the payslip.  Some lenders will also want to view the previous year’s PAYG summary.

Self-employed workers: you will need to be self-employed for at least 1-2 years, but this is at the lender’s discretion.

Most banks do not need to use the previous year’s tax return until March the year following the close of the previous year.  For example, with many banks you would not need 2017/18 until March 2019.  This means that you could still use the income earned in 2016/17 as a basis for proving loan serviceability. 

Understanding your employment type and bank employment policy is important, but it can be time-consuming and sometimes more than a little stressful! That’s why we recommend enlisting the help of an experienced and qualified mortgage broker who can help you navigate different lenders to find the one that is right for you.

Peard Finance mortgage brokers are mobile and have years of experience to help you make the right choice. We will only recommend lenders who will consider your employment status, so you have the best chance of approval. For more information on their services, send us a message here or call us on (08) 9273 8955.

The information contained herein is for informational purposes only and should not be solely relied upon as financial advice. Please contact Peard Finance for an individual assessment of your finances today.

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