Banks prefer to lend money to low risk professionals like teachers. This is why you may be able to score a great deal on teacher home loans especially if you apply with the right lender.
Even if you’re still on probation, you’re a casual worker, or self-employed, you may be able to qualify for a home loan.
Find out how and why lenders have more flexible lending criteria for teacher home loans.
Why teachers are lenders’ pet
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.
Although most teacher home loans may not include big discounts, lenders tend to be more flexible with their policies. If you’re borrowing an exceptionally large amount, you may qualify for a special interest rate discount though.
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.
Can I get a home loan if I’m a self-employed?
If you’re running a teaching institute or are working as a supply teacher, you can still get a home loan. However, most lenders will require you to have been self employed for at least two to three years.
You can learn more about this on our self employed home loan page.
How do you qualify for a teacher home loan?
Lenders are more flexible when it comes to teacher home loans because they know that you’re less likely to fall back on making timely repayments.
You can qualify for a teacher home loan as long as you can meet the following requirements:
- Sufficient deposit: Most lenders will require that you have a minimum deposit of 10% of the property value. There are also no deposit home loan options such as using a gift as a deposit.
- Genuine savings: Most lenders will require you to have at least 5% in genuine savings specifically if you’re borrowing 90% LVR or more. Genuine savings is essentially money you’ve saved over a time of at least three months in a bank account.
- Clean credit history: Lenders prefer borrowers with no bad credit records on your credit file. You’re more likely to qualify if you can show that you’ve been paying all your bills on time, every time for the last six months.
- Strong asset position: You must have a good asset position relative to you age and income. This also means that you must not have excessive debts.
Please note that for high LVR home loans, you’ll have to meet stricter lending criteria.
Our mortgage brokers specialise in teacher home loans. We can help you create a strong loan application so you’re more likely to get approved the first time around.
You can speak with one of our mortgage brokers by calling us on 1300 889 743. You can also complete our free online assessment form to see if you qualify.
Is there any way to avoid LMI?
Lenders Mortgage Insurance (LMI) is a one-off fee usually charged when you borrow more than 80% LVR. It can amount up to several thousands of dollars so it would be great to avoid it.
The simplest way to avoid LMI is by borrowing 80% LVR or lower. However, please note that LMI is applicable at 60% LVR for low doc loans.
There’s little chance you can avoid LMI if you’re borrowing more than 85% LVR. However, if you have a guarantor, you can avoid mortgage insurance as well as the need for a deposit.
What if I don’t qualify?
Although lenders consider teachers to be in a low risk profession, you may still not get approved on a home loan.
If you don’t qualify, ask the lender the main reason behind it. After you know why, contact a mortgage broker before you reapply.
Our mortgage brokers have many years of experience in the credit industry. We know which lenders can be more flexible with their lending criteria and which lenders are not.
You can discuss your situation and loan needs with one of our credit specialists by calling us on 1300 889 743. You can also fill in our free online assessment form if you’d prefer one of us to contact you instead.
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.
I can’t qualify because of bad credit
As long as you don’t have excessive bad credit, you can take out a bad credit home loan. This way you can still get a home loan even if you have bad credit records such as:
- Defaults, judgments and court writs.
- Debt agreements.
- Missed payments.
- Low credit rating.
- Discharged bankruptcy.
Does being a casual worker affect my home loan assessment?
Many lenders may only use 50% of your income if you’re a casual teacher. In addition to that, they may require you to have a 12 month work history before they accept any income.
However, if you can show that you’re in a strong financial position, you may be able to qualify for a home loan.
Please note that if you’re a casual worker and you don’t have full financials, most lenders will not approve your home loan application.