You can still get a Home Loan with Non Standard Income / Employment
Despite a changing workforce with a diversity of employment types, banks are still very conservative. Lending polices are increasingly tougher and this is making it more difficult than ever to obtain a home loan. Traditionally, banks saw individuals that worked a 9-5 job in a high demand industry as low risk borrowers, however the work force is changing at a rapid pace. Some of the highest earners work on a contractual basis or are self-employed. So how can you get past strict lending policies and demonstrate an ability to fulfill your loan obligation? Finding a good mortgage broker is essential. They can assist you in applying for a home loan as they have in-depth knowledge of lending policies and know how the banks operate. Read on to find out how you can get approval, regardless of your unusual employment income situation.
Home Loans For All Employment Types in Australia
Across a variety of industries people are changing their employment type to suit their lifestyle. Instead of working full-time, some are working on a contractual basis, students are working casually, mothers are taking maternity leave and many are self-employed or are still on Probation.
It is quite common for individuals to change jobs several times throughout their working career. With those changes come probationary periods, potential bonus income, a change to sales role working on a commission basis, or salary sacrificing through their remuneration package. However banks don’t like to see gaps in your employment and prefer if you have been working in the same industry for a lengthy period of time. But why do they take this view?
Why are banks so conservative?
There is a large risk in lending and banks have a reputation to uphold as responsible lenders. Whilst it is easy to suggest that banks have security over your property and therefore your employment situation is irrelevant, this is simply not the case. Lenders need to ensure that you have a sound ability to fulfill your financial obligations and repay the loan amount. Banks assess your ability to repay the loan with reference to your current income and future employment stability. This is why it is incredibly important that you present the banks with all the right documentation so that they are willing to lend you the amount you require.
What are the banks looking for?
Regardless of your employment situation, banks want to see:
- employment stability
- solid working history
- stable income
- no defaults
Where you can meet those conditions, banks are more willing to lend. But, income differs from job to job, so how do you make it count toward a home loan? Some banks will not allow some types of income, such as overtime or rental income. This is where you may encounter difficulty in the application process. As such, it is always best to speak to an expert mortgage broker who knows what the banks are looking for and how best to shape your application to ensure that you get approval.
What do I have to provide
Most banks require several forms of documentation to evidence your income. This may include, two years recent tax returns, income statement, pay slips and in some cases, even bank statements. If you might have difficulty producing these items it is advisable to go low doc. However, a low doc home loan may have higher interest rates.
How can I get approval?
Given the hurdles in applying, it is best to get advice from a mortgage broker. The good news is that there are lenders who are still willing to lend, regardless of your credit status or unusual employment situation. Some even offer great rates and low fees.
However, like any large financial obligation, it is necessary that you budget, draw up a financial plan to see how much you can afford and ensure that you have employment security. Unemployment and lack of income supply may reduce your ability to pay your mortgage. As such, you may default on your home loan.
Plan ahead and you’ll be able to manage your loan obligations with no issues! Discuss your situation with someone today and you will be on your way to getting approved and owning that dream home.
