How much can teachers borrow?
Teachers can find it difficult to get home loan approval because most banks don’t understand how to assess their income over a year.
Luckily, not all lenders take this conservative view and will fight for your business:
- Borrow up to 95% of the property value: You’ll need a clean credit file, regular income (casual teachers are accepted), and buying a standard residential property in a metro location.
- Borrow up to 110% of the property value: A guarantor loan allows you to borrow 100% of the property value plus the purchase costs.
- Negotiated interest rates: We have strong relationships with major banks and lenders, so we get to negotiate a competitive interest rate.
Call 1300 889 743 or fill in our online enquiry form to discover if you qualify for a teacher home loan.
Why do most lenders have a problem with casual teachers?
Working as a casual or supply is simply the nature of starting your career as a new teacher.
Some teachers work casual indefinitely.
The problem that banks have is that you only work around 40 weeks per year.
During the long summer break, there’s often no income which means most banks won’t approve your home loan.
Luckily, some lenders will work off your gross year to date (YTD) income to determine your average fortnightly salary.
The lender will typically require you to:
- Have been in your casual position for at least 3 months.
- Provide payslips showing consistent income over a 3-month period.
Try the year-to-date calculator to work out your YTD income for a teacher home loan.
Do I need to provide an employment letter?
In some cases, yes, the lender may ask for a letter of employment to prove your current and future employment status, namely:
- How long you have been a teacher.
- Whether you have a block of teaching confirmed for the upcoming term.
- Whether you will continue to work as a casual, if you’re looking for temporary work elsewhere or whether you will soon be made a full-time teacher.
Will banks consider income from a second job?
It’s common for teachers, particularly those employed on a casual basis, to work a second job to supplement their income.
Most commonly, teachers work as tutors on the side focusing on particular specialities like maths or English.
- The second job needs to be in the same line of work so a role as a tutor will typically be accepted.
- Some lenders will accept 100% of your income if you can show that you have a 6-12 month work history and have been earning a regular income.
- If you’re self-employed, you need to have been working for at least 2-3 years and provide your tax returns, notices of assessments (NoAs) and an accountants letter to verify your income.
- Some lenders will consider less than 3 months work history if you’re in a strong financial position with a clear credit history.
- It’s best that we provide all of your income evidence, including payslips and tax returns, from both roles up front.
We can let you know if lenders will accept second job income for your teacher home loan application.
Call 1300 889 743 or complete our online enquiry form today.
What if I receive a Higher Duties Allowance?
It’s not uncommon for experienced teachers to be promoted to higher duties while still completing their day-to-day tasks.
A prime example of this is being promoted to year coordinator which often comes with a higher salary or a Higher Duties Allowance (HDA).
Getting the bank to accept your higher income can significantly increase your borrowing power for a home loan.
As long as you can provide an employment letter from the principal stating that this new position is ongoing, along with two payslips showing your new income, some lenders will accept 100% of this new income.
What if I’m a teacher on probation?
Teacher home loans are available even if you’re still on probation.
However, note that you’ll need to meet all other standard lending criteria and have a clear credit history.
If you’re borrowing more than 90% Loan to Value Ratio (LVR), you may need to provide additional supporting documents to get loan approval.
Getting a bank to accept 100% of your overtime income
Some lenders can consider 100% of a teacher’s overtime income as part of their assessment.
Generally, you’ll need to provide a letter from your employer confirming that you’ve received overtime income for the past year. You’ll also need to provide your two most recent payslips and a group certificate.
Can I get help with my home loan during the school holidays?
During the school term, you’re busy planning classes and marking homework, so you typically don’t have time to search for a property, speak to a real estate agent or start your home loan application.
When you do have time to speak to a professional or need an employment letter to prove your income, agents are on holiday and the school is closed.
Luckily, the HR department of most schools is open during school holidays. Most teachers don’t know this!
In addition to this, most schools have online payroll systems that allow you to login to take a screenshot of your income and employment evidence.
Be sure that when you do take a screenshot that your name and employment details are visible otherwise the bank may not accept it.
Similarly, if your employment contract will be signed off over the Christmas holidays, most teachers can contact their principals to provide an employment letter confirming that your contract will be renewed for the coming school year.
Provide your principal with an employment letter template to make the make the home loan application process easy.
Am I eligible for 85% waived LMI?
Teachers are highly sought after by lenders because they have stable employment which means a regular income.
Because of this, some lenders will allow you to borrow up to 85% of the property value and waive the cost of Lenders Mortgage Insurance (LMI).
LMI is charged by most lenders when borrowing more than 80% as a way of minimising the loss if you default.
It can cost you around $9,500 when borrowing 85% on an $800,000 property.
Do you qualify for 85% no LMI?
- You must not be borrowing more than 85% LVR.
- Your maximum loan size must not exceed $1,500,000.
- Your credit file must be free of black marks.
- You must have a strong income.
- You must have stable employment with a good work history (typically 6-12 months in your role).
- You must be purchasing a property (refinances accepted on a case by case basis).
Try the LMI calculator to discover how much you could save.
What can I use the home loan for?
However, lenders may accept other loan purposes such as debt consolidation on a case by case basis.
Are you eligible for a teacher home loan?
Banks favour teachers because they are considered less risky borrowers compared to other professions.
That’s because teachers generally have stable employment and they’re conservative with their spending habits.
We’re experts in teacher home loans and have helped education professional all over Australia, whether you’re employed by:
- NSW Department of Education.
- ACT Education Directorate.
- Queensland Department of Education, Training and Employment.
- Department of Education and Training, Victoria.
- Department of Education, Tasmania.
- Department of Education and Child Development (South Australia).
- Northern Territory Department of Education.
- Department of Education and Training, Western Australia.
Call 1300 889 743 or fill in our online enquiry form to speak with a mortgage broker.