Will we be eligible for a home loan when we have worked for less than 6 months?

Any general questions you might have in regards to loans and finance.
Delora
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Joined: Fri Oct 18, 2019 6:24 pm

Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Delora » Fri Oct 18, 2019 7:26 pm

My partner and I are looking to purchase our first home but we aren't sure what we can afford or how much we'd get approved for. The property we’re looking at is $680,000.
We have saved a $30,000 deposit and are also eligible for the $15,000 First Home Owners Grant. My partner earns an annual income of $57,000 while I earn $48,000. We don't have credit cards, but my partner has a $7,000 car loan. We have only been in our current job for 5 months. Our current lease will be expiring on January 2020, and we hope to get a loan approved before this.
Will we be eligible for a home loan when we are on probation have worked for less than 6 months?

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Otto Dargan
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Re: Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Otto Dargan » Fri Oct 18, 2019 7:34 pm

Hello Delora. Welcome to the forums.

You might be able to get a home loan approved, even when you are on probation.

The applicant’s employment status is a crucial factor that banks and lenders will scrutinize to understand the risk posed by the applicant. Your employment and income stability forms a huge part of a credit score that is given to the applicant. So, lenders and banks will look into:
  • The length of time in your current job.
  • The length of time in the industry (study included).
  • The tendency of people to default on their mortgages.
  • Employment status (full time, part-time, etc)
  • The stability of your income (casual, overtime, bonus, etc).
  • Your reliance on unstable income.
Therefore, even when you’re on probation, your chances of home loan approval are higher especially if you’ve been working in the same industry. While most lenders at least want the applicant to be in the job for at least 6 months, we have lenders on our panel who will accept applicants who have been working for at least a month.

The underlying factor is that you and your partner must be able to show evidence of your income. This can come in the form of payslips, group certificates, a letter from your employer or even bank statements.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for an on probation home loan.

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

Delora
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Joined: Fri Oct 18, 2019 6:24 pm

Re: Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Delora » Fri Oct 18, 2019 7:40 pm

Alright then, didn’t know our employment status would affect our credit score. Thanks for the information. Would the car loan further impact our credit score?

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Otto Dargan
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Re: Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Otto Dargan » Fri Oct 18, 2019 7:45 pm

Hi Delora,

Depending on whether your partner has been making regular and timely repayments on the car loan, it could either positively or negatively affect your credit score.

Getting a car loan will automatically leave on an enquiry on your partner’s credit file. However, with Comprehensive Credit Reporting adopted by the major banks and lenders, they will look favourably look at applicants who have been making timely repayments on their loans.

If your partner has been making timely repayments on the car loan, then this could strengthen the home loan application.

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

Delora
Posts: 3
Joined: Fri Oct 18, 2019 6:24 pm

Re: Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Delora » Fri Oct 18, 2019 7:48 pm

That’s great to know. What other factors do banks assess? Is the deposit too low?

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Otto Dargan
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Re: Will we be eligible for a home loan when we have worked for less than 6 months?

Postby Otto Dargan » Fri Oct 18, 2019 7:58 pm

Hi Delora,

Most banks and lenders require 5% of the property value ($34,000) but to avoid Lenders Mortgage Insurance (LMI), it is best to save 20% of the property value ($136,000).

Besides deposit, banks and lenders will also look into the following factors:
  • Ideally, applicants must be in their current job for 6 months, but lenders will assess this on a case by case basis for strong applicants.
  • A clean credit file and credit history are ideal. You can even get a free copy of your credit file for more details. Make sure to pay off existing debts and do not apply for unnecessary credit cards or enquire about loans 12 months prior to your mortgage application.
  • Lenders are conservative when it comes to approving loans to unusual properties.
  • Your asset position should align with your age and income.
  • A good repayment history is a great indication that the applicant will be able to make repayments on his/her mortgage as well.
If you fulfil the above criteria, then the chances of getting your home loan approved are much higher. However, if there are any problems, then you can still get approval with specialist lenders 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.

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


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