How long do I need to be in my current job before I can apply for a home loan?

Different lenders each have their own criteria for employment, but there are general guidelines to be aware of.

Updated January 2021:

Many Australians currently find themselves in new jobs due to Coronavirus and other reasons. As of January 2021, mortgage interest rates are at all-time lows, with some lenders offering rates of under 2.00%. Read on to understand how to get a home loan when you're in a new job.

The nature of your work can have a big impact on whether you secure a home loan.

It’s not uncommon, for instance, for home buyers to be knocked back for a loan – even by the bank they’ve always used, just because of their employment status.

This highlights how being an established customer of a bank is no guarantee that you’ll be offered a home loan.

What matters is the length of time you’ve been in your current job – the longer, the better. Here’s what you need to know.

Full-time employment

Most lenders like to see that you’ve been in your current job for at least three months, and at a minimum, completed any probationary period. The bank may contact your boss to confirm your employment status.

Proof of employment that you’ll need to provide includes a minimum of two of your most recent, consecutive pay slips.

Permanent part-time employment

Again, you will need to have been in the job for at least three months, and provide evidence via several of your latest pay slips.

Lenders are likely to run an employment check when you work part-time, to confirm the minimum number of hours you work each week.

Casual employment

Casual employment is a more flexible type of employment as you will not receive a firm commitment from an employer about the length of employment or even the days or hours you’ll work each week. Having casual employment will mean that you may work irregular hours and benefits such as paid sick or annual leave is not available. 

These differences with casual employment can make a lender stricter purely because there is less certainty over your income. While it’s still possible to get a home loan with casual employment, it is important to understand that lenders are strict on the terms of your income due to the responsible lending requirements outlined by the NCCP.  

Reflecting this, lenders typically want to see that you’ve been with your current employer for a minimum of six months. 

It’s likely you’ll need to show payslips that feature your latest year to date earnings summary. In addition, the lender may get in touch with your employer to check your employment status.

Tips to improve your chances of being approved with casual employment:

  • Save for a sizable deposit: having a larger home loan deposit can help your application process as it gives the lender an idea of what you can afford to repay regularly.   
  • Use a guarantor: a guarantor can be used to provide additional security for your home loan. This will help provide extra assurance to a lender of how the loan can be serviced in the event you are unable to make the repayments.
  • Saleable assets: having saleable assets can be a benefit when applying for a home loan on casual employment as it decreases the perceived risk lenders have in the event you are unable to service the loan.
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What if you’ve recently changed jobs?

The reality of today’s world of work is that we change jobs a lot more frequently than we used to.  A lot of factors is taken into account during a job transition. Some of the factors lenders look at are:

Income and pay structure

Are your income levels relatively the same or higher? and is your pay structure the same? Some applicants may have had a change in pay structure. For example, you may have been a salaried employee to an hourly. Other scenarios, you may have taken up a role with a lower base pay with a commission structure.

Your expenses

How much are your living expenses? Be prepared to provide evidence as some lenders will ask for bank statements to ensure you are not understating your expenses.

Debts

Student loans, credit card debt, car loans etc can all impact your overall attractiveness as a mortgage borrower and your borrowing power. Lenders tend to check your credit score to assess your overall financial consistency and debt repayments.

Industry experience in your current role

A home loan applicant that has recently changed jobs in the same industry or field of expertise is safer from a lender's perspective as it demonstrates a level of certainty that you will be able to pass your probationary period.

We are here to help

If you have recently switched to a new job it doesn’t mean you have to give up on your home buying plans. But it is important to speak with your Mortgage Choice broker.

With our extensive panel of lenders, you may still be able to secure a home loan even if you haven’t yet cleared the probationary period of your new role.

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FAQ

You can buy a house or get a home loan when you work part-time, however lenders may not make it as easy compared to permanent full-time workers. For permanent part-time workers, lenders generally look for those that have a stable amount of hours and passed your probationary period.

For part-time casual workers, make sure you can prove a level of financial stability and certainty. Lenders look for minimal risk applicants. Be prepared with documentation of consistent work hours and payslips.

Yes, it is possible to get a mortgage on casual employment. The context around your casual employment and personal circumstances can play a big part in the approval process of your home loan. This can include whether you are still on probation, level of income, fairly consistent work hours and also the length of employment in the same industry or field can also help you.

Take for example a casual employee for the last 3 years working in the retail industry, compared to a new casual employee that recently transitioned from another industry to the retail industry. The lender will likely ask for more evidence for the latter scenario, in order to provide a level of certainty you have the means of making your monthly repayments for your home loan.

The above factors can affect your overall mortgage borrowing power, however other factors like debt can also impact your home loan approval. Be sure to talk a to mortgage expert for tailored advice to your circumstances

Lenders can differ in their criteria for the length of employment for your current job. Generally they are looking for home loan applicants that have passed their probationary period of employment, show a stable income level. Although some lenders may review on a case by case basis.


Posted in: Home loans

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