The Bank Doesn t Like The Way You re Employed? Find Out How To Get Approved!
My bank has a house as security, what are they worrying about?
It's a common misconception that because banks have security for a loan that they have nothing to lose. Far from it! If you were to default on your loan the bank can lose a fortune due to delays in selling, legal costs and interest adding on. It's for this reason that banks need to be sure you will repay the loan as well as making sure that there is good security.
So what is wrong about my job?
From a bank's point of view your job is seen as an indication of how stable your income is and thus how effective you will be at repaying a home loan. Credit officers handle hundreds of files every week and have seen just about every type of situation where things go wrong. So they become very conservative!
Banks look at the worst case scenario, what would happen if your casual job is terminated? How would you repay the loan if your agency couldn't find you another temp job? What happens if your employer terminates you during your probation period?
Casual, probation & contract jobs
If you are casual, on probation or contract employed it is simply a matter of finding a lender that views your job to be a low risk. Different banks have different opinions, and there are usually one or two out there that can help. A mortgage broker that specialises in lending for difficult employment situations should be able to help.
Temp and agency workers
If you have a temp job or are employed through an agency then you'll have a much harder time. Some lenders will flat out refuse to allow you to borrow more than 80% of the property value! If you need to borrow more than 80% than find a lender that can work with temp employees and prove a track record of employment in the same industry.
Some banks take the view that if you have been in the industry for at least 2 years and have valuable qualifications then you are unlikely to be unemployed for long! By showing group certificates, tax returns, your resume or even your degree or tafe certificate you make the credit officer feel more comfortable with lending you money.
In what situation would I have almost no chance?
How good is your credit history? Generally banks will not lend to someone who has both a bad credit history and less reliable employment. The only way around this is to have a large enough deposit to borrow less than 80% of the property value and a good reason for your credit problems backed up with evidence. Good reasons (from a lenders point of view!) for having bad credit include being very sick, divorce or small business failure.
Do you keep losing your job? People who constantly move from job to job without good reason don't stand a chance. Ask yourself, if I'm not able to hold down a job should I be applying for a home loan? Chances are you'll only hurt yourself so why not rent until you find a job that is suitable.
Have you changed careers? Lenders see anyone who hops from career to career as a higher risk. If you are on probation as a private detective but have worked as a policeman for the last 5 years then this is the same line of work so banks would usually be ok with it. On the other hand someone who has just got a job as a private detective but used to work as a personal trainer would have a very tough time! In these cases it would be best to wait until you are off probation or have at least a three to six month history in your job.
What can I do if my salary is paid cash in hand or if I can't prove that I have a job?
Plenty of Australian workers can't provide proof of income such as payslips or tax returns. For these cases some lenders have come out with PAYG low doc loans that will allow you to borrow up to 70% or even 80% of the value of your home without providing any evidence of your income. All you have to do is sign a one page form known as a low doc declaration on which you state your income and that you can afford the loan!
How do I know if I can get a loan?
If all else fails get the advice of a good mortgage broker. We know the lending guidelines of many banks, not just one. So we can give you a quick answer without you having to apply with multiple lenders!
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