Can a casual employee get a home loan?

Any general questions you might have in regards to loans and finance.
Hannah
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Joined: Wed Jul 24, 2019 7:28 pm

Can a casual employee get a home loan?

Postby Hannah » Wed Jul 24, 2019 7:30 pm

I am looking to buy a home with my husband. I am currently employed as a nurse (casual employment basis) while my husband is completing his Masters. We have saved $70,000 and are hoping to buy our first home in Sydney, which is selling at $525,000.
Can a casual employee get a home loan?

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Otto Dargan
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Re: Can a casual employee get a home loan?

Postby Otto Dargan » Wed Jul 24, 2019 7:38 pm

Hello Hannah.

Thank you for reaching out to us and welcome to the forums.

Yes, you could get approval for casual employment home loan. Lenders will look into how long you've been in your job, whether you worked in the same industry previously, how regular your hours are, your loan to value ratio (LVR), and if you have at least 5% in genuine savings.

LVR is the amount you are borrowing represented as a percentage of the value of the property being used as security for the loan. For example, let's say you're borrowing $90,000 to buy a $100,000 property, your LVR will be 90%. And if you're borrowing $80,000, then your LVR is 80%.

Most lenders require that casual employees have been in their job for at least 12 months.

However, it’s understandable that not all casual employees have worked in the same job for 12 months. Therefore, some lenders do accept the following situations:
  • If you are a permanent casual and have been working the same hours each week for at least one month in your job.
  • If you work irregular hours then must have been in the same job for at least 3 months.
Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a casual worker home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hannah
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Joined: Wed Jul 24, 2019 7:28 pm

Re: Can a casual employee get a home loan?

Postby Hannah » Wed Jul 24, 2019 7:52 pm

Great to know. Are there ways to improve my chances of getting approval as I would love to stay in my new home asap!

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Otto Dargan
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Re: Can a casual employee get a home loan?

Postby Otto Dargan » Wed Jul 24, 2019 8:01 pm

Banks and some lenders have a perception that there are higher chances of casual employees defaulting on their loans.

However, there are ways you can increase your chances of getting approval and even increasing your borrowing power like:

  • Cancel your unused credit cards and try to reduce your credit limit so you can improve your borrowing power. As banks use the full limit of your credit cards instead of the balance when assessing your repayment, cancelling some of your credit cards help with the borrowing power.
  • Try and assess if you can keep up with ongoing and living expenses of your new home. You can use our monthly expenditure calculator to see if you can keep up with expenses and payments.
  • Choose a lender that will consider your overtime and other bonuses as assessable income, as some casual employees are paid overtime bonuses.
  • Since this is your first home, you could even get a First Home Owners’ Grant, that is only available for new houses and stamp duty is exempted for homes valued to a certain limit.
  • The most common loan terms are between 25 to 30 years. Extending your loan term could increase your borrowing capacity while keeping your repayments lower. However, you will pay more in interest over the life of the loan.
  • A bigger deposit is looked at favourably by the banks. If possible, you should look at increasing your deposit.
  • Provide updated documents like recent payslips, a letter from your employer, last year’s tax return, bank statement to prove that you have genuine savings.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Hannah
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Joined: Wed Jul 24, 2019 7:28 pm

Re: Can a casual employee get a home loan?

Postby Hannah » Wed Jul 24, 2019 8:07 pm

Thanks for the help. How does a lender actually calculate my income? Do they look into the bonus I’ve earned, overtime, etc? How much can I really borrow?

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Otto Dargan
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Re: Can a casual employee get a home loan?

Postby Otto Dargan » Wed Jul 24, 2019 8:38 pm

Hi Hannah,

Each lender has its own method of calculating the income of a casual employee. Most lenders look into your last two years group certificates and then they use the lower of the two. Unfortunately, this is not a viable calculation for employees who have not been in the same job for a number of years.

Therefore, lenders use a Year To Date (YTD) gross income to calculate your annual income. You can use our YTD calculator to assess your income.

As a casual employee, you might be able to borrow up to 90% of property value.

If you need to borrow up to 95%-105% of the property value then you will need a guarantor.

If you have to borrow over 80% of property value, then you will have to pay LMI as well.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan on casual employment
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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