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Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 2:29 pm
by Matt
We are having trouble getting a home loan with a $90,000 deposit and looking at a house worth $415,000. My partner and I work part time and we also have our own business since February 2018. I earn $35,000 p.a.and he earns $40,000 p.a. These are just estimated numbers. We applied with ING, but they declined our application as our ABN hasn’t been registered for 2 years. Will lenders assess the income of my part-time job and business?

Re: Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 2:50 pm
by Otto Dargan
Hello Matt. Welcome to the forums.

Yes. There are lenders who will assess your part-time and business income when calculating your serviceability (borrowing power)

Some lenders and banks are quite conservative when it comes to assessing the income of part time employees as these borrowers are seen as riskier due to their unstable employment situation. Most lenders will require you to be in the job for at least 6 months and you will need to show your recent payslips, group certificates or tax returns as proof of income.

If you’ve been working for less than a year, then some lenders will only assess 50% of your income. There are some lenders who might accept 100% of the income if you’ve been in your job for more than a year.

Banks and lenders will assess your business income in the following ways:
  • Some lenders might use the lowest income of the last two years.
  • Some even use the most recent year’s income shown on your tax return.
  • Others might average the two years income or take 120% of the lowest year’s income.
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.

Cheers,

Re: Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 3:04 pm
by Matt
Thanks for the info. Will the interest rates be higher since major banks won’t be accepting my application?

Re: Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 3:29 pm
by Otto Dargan
Hi Matt,

There are some major lenders who will look into your application and offer you competitive interest rates, even when you are working part-time. Although the options are few, one or two lenders can look into your situation and get you the best deal for your situation.

If you are a riskier borrower, then the interest rates would be higher. However, since you have saved a sizeable deposit and are earning a decent income, then lenders would not view you as a risky borrower.

Cheers,

Re: Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 3:53 pm
by Matt
OK, good to know. Do I have to pay Lenders Mortgage Insurance, cause a self-employed buddy of me had to pay it?

Re: Will lenders assess the income of my part-time job and business?

Posted: Tue Oct 15, 2019 4:05 pm
by Otto Dargan
Hi Matt,

Lenders Mortgage Insurance (LMI) is only paid when the loan to value ratio (LVR) is more than 80%. Calculating the LVR, it is 78% so you do not have to pay LMI.

LMI is a one-off fee paid by borrowers who need to borrow more than 80% of the property value. It is an insurance that assists the bank or lender if the borrower defaults on their mortgage repayments.

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 for part-time workers.

Cheers,