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Unusual Employment Loans

How To Secure Approval For An Unusual Employment Loan?

employment loan

Getting a lender to accept your income as accurate and approve your loan application involves several key steps

1. Choose the Right Lender:

  • Opt for a lender that views your specific financial situation favorably. Different lenders have varying criteria and policies, and some may be more accommodating to your circumstances.

2. Provide Comprehensive Documentation:

  • Compile the best possible combination of documents to support your income claims. For instance, if your recent payslips reflect a lower income due to a lack of overtime, consider including your group certificate and a letter from your employer to present a stronger income picture.

3. Consult with Experts:

  • Seek guidance from professionals who specialize in securing loans for individuals with unique or unconventional employment situations. Mortgage brokers with expertise in this area can provide valuable insights and guidance.

4. Compare Loan Options:

  • With the help of experts, compare the loan offerings from different lenders. This allows you to assess the loans’ terms, interest rates, and fees to determine which options are most competitive and suitable for your needs.

To get started and explore your home loan options, contact us at (03) 6144 9669. Our team of experts can assist you in securing a loan that aligns with your specific financial situation and employment circumstances

We Can Assist With Various Employment Types And Income Sources

We specialize in helping individuals with unique employment situations and income sources. Here are some of the employment types and income variations we can assist with:

  1. On Probation: We can guide you to lenders and loan options suitable for individuals who have recently started a new job and are on probation.
  2. Contract Workers: Discover the reasons why many lenders are cautious with contract employees and learn how to find lenders that offer mortgages for contractors.
  3. Self-Employed: Not all lenders assess tax returns the same way. Some lenders consider BAS statements or allow you to self-declare your income. We can help you navigate the options available.
  4. Casual Employees: Being a casual employee doesn’t necessarily hinder your ability to secure a home loan, especially if your job is stable. We can assist in finding lenders open to considering your application.
  5. Overtime Reliance: If a significant portion of your income comes from overtime or bonuses, we know which lenders will take your full income into account when assessing your eligibility.
  6. Temp/Agency Workers: Many people are employed through agencies, but not all banks are accommodating to this. We can help you identify lenders that work with agency employees.
  7. Bonus Income: We can guide you to lenders who consider bonus income as part of your annual earnings.
  8. Doctor Home Loans: Medical professionals may be eligible for discounts and waived Lenders Mortgage Insurance (LMI) through specific doctor home loan programs.
  9. Discounts for Professionals: Various professionals and high-net-worth individuals, including dentists, vets, accountants, lawyers, and mining engineers, may qualify for significantly reduced interest rates on their loans.
  10. Rental Income: If you earn income from rental properties, we can help you make the most of that income when applying for a mortgage.
  11. Commission Income: Individuals working in sales roles with commission-based income can find lenders willing to accept commission earnings as part of their assessment.
  12. Maternity Leave: Under maternity leave home loan packages, some banks consider your return-to-work salary for income assessment, with options available for leave periods of up to 1 or 2 years.

We can also provide assistance in various other situations and with different income types. If you have unique income circumstances, contact us at (03) 6144 9669 or complete our free assessment form to learn more about your options.

Unusual Income Types:

Non-traditional or irregular income often accompanies unique employment situations, particularly in industries like government roles or sales professions. Some examples of bonuses or incentives that lenders may consider when assessing your income include:

  • Annuity income
  • Bonus income
  • Commission income
  • Company car
  • Salary sacrifice or packaged salary
  • Stipend income

The more income sources a lender considers, the greater your borrowing power. We can help you identify lenders that are open to these unique income types and tailor your loan application accordingly.

Why Do Banks Care About Your Employment?

Many individuals wonder why their employment status is of concern to banks when the property itself serves as collateral. The key reasons are as follows:

  1. Risk Mitigation: While the property does provide security for the loan, selling a property is typically a last resort for banks. They aim to avoid foreclosure and property sale whenever possible. Banks are cautious about lending to individuals who may not be able to meet their financial obligations because it can lead to increased risk.
  2. Reputation: Banks value their reputation and aim to maintain responsible lending practices. They do not want to engage in lending that might lead to financial distress for borrowers or damage their own brand. Ensuring that borrowers can comfortably repay their loans is a way for banks to maintain their reputation. Banks value their reputation and aim to maintain responsible lending practices. They do not want to engage in lending that might lead to financial distress for borrowers or damage their own brand. Ensuring that borrowers can comfortably repay their loans is a way for banks to maintain their reputation.
  3. Loan Repayment Certainty: Banks require documentation related to your income and employment to establish that the loan will be repaid. They seek assurance that borrowers have a stable and sustainable source of income to meet their loan obligations.
  4. Legal Obligations: Banks operate within a regulated financial environment, and they are subject to laws and regulations that mandate responsible lending. Collecting information on borrowers’ income and employment is often a legal requirement to ensure compliance with these regulations.

In essence, banks prioritize responsible lending and the ability of borrowers to meet their loan commitments. They use information related to income and employment to assess the risk associated with each loan application and to protect their reputation as responsible lenders.

What Documentation Do You Need To Provide For A Loan Application?

When applying for a loan in Australia, you’ll typically need to provide documentation that verifies the income you’ve declared on your loan application. Lenders use these documents to assess your financial situation and determine your eligibility for a loan. The required documents may include:

  1. Payslips: Your recent payslips from your employer, which provide details of your regular income and deductions.
  2. Group Certificates: Group certificates, also known as Payment Summaries, issued by your employer at the end of the financial year. These documents summarize your income and the taxes withheld by your employer.
  3. Letter from Your Employer: In some cases, a letter from your employer may be required to verify your employment and income details. This letter should be on your employer’s official letterhead and signed by an authorized representative.
  4. Bank Statements: Recent bank statements can be used to demonstrate your income, especially if you are self-employed or have irregular income sources. These statements show your financial transactions and can be used to assess your overall financial health.

The specific documentation required may vary depending on your employment type, the lender’s policies, and the type of loan you’re applying for. It’s essential to work with a mortgage broker or lender to understand the exact documentation needed for your loan application.

If you have concerns about whether you have sufficient documentation for a loan application, you can contact us at (03) 6144 9669 . Our mortgage brokers can guide you through the application process and help you gather the necessary documentation for loan approval.

How Banks Assess Your Employment For Home Loan Applications

When you apply for a home loan, banks and lenders assess your employment and income stability as part of their risk evaluation process. The factors they consider include:

  1. Length of Time in Your Current Job: Lenders typically prefer borrowers who have stable employment and have been in their current job for an extended period. This indicates a reliable source of income.
  2. Length of Time in Your Industry: Your industry experience and qualifications can impact your application. Some lenders may consider your educational background and the industry you work in when evaluating your application.
  3. Industry-Specific Risk: Lenders may assess the risk associated with your specific industry. Certain industries, such as healthcare, may be considered lower risk, while others, like construction, could be perceived as higher risk due to fluctuations in employment.
  4. Employment Status: Your employment status, whether you are full-time, part-time, casual, or on contract, plays a role in the assessment. Full-time and permanent positions are typically viewed more favorably.
  5. Income Stability: Lenders evaluate the stability of your income, taking into account any additional income sources, such as overtime, bonuses, or commission. A stable and consistent income stream is preferred.
  6. Reliance on Unstable Income: If your income relies heavily on unstable sources, such as commission or irregular bonuses, this may impact the assessment of your loan application.
  7. Complex Lender-Specific Factors: Each lender may have its own set of criteria and factors that are specific to their risk assessment process.

It’s important to note that different lenders may have varying policies and risk assessment criteria. Working with a mortgage broker can help you identify lenders who are more likely to approve your loan based on your specific employment situation. A mortgage broker can also provide guidance on how to present your employment and income stability in the best possible light to improve your chances of loan approval.

The Significance Of Job Stability In Home Loan Applications

Job stability is a crucial factor in home loan applications. Even if you have a high income, lenders pay close attention to the stability of your employment situation. Here’s why job stability matters:

  1. Income Source Security: Lenders need assurance that your income source is stable and reliable. Full-time employment is typically seen as a secure income source, making it more favorable to lenders.
  2. Risk Assessment: Banks and lenders assess the risk associated with lending to individuals with uncertain or unstable employment. The risk is higher when borrowers can’t demonstrate a stable income source.
  3. Lending Confidence: Lenders are more confident in approving loans for individuals with a stable job history because it indicates a higher likelihood of meeting financial obligations.
  4. High LVR Loans: When you’re borrowing over 80% of the property’s purchase price, lenders become even more cautious. They want to ensure that you can support the loan, and job stability is a key factor in their assessment.
  5. Lender Variations: Different lenders may have varying policies when it comes to assessing job stability. Some may be more lenient than others based on your specific employment situation.

Our team is well-versed in the policies and criteria of various lenders. We can help you find lenders who are more likely to approve your home loan application based on your current employment situation. If you have concerns about your job stability, don’t hesitate to contact us, and we’ll provide guidance on how to improve your chances of loan approval.

Understanding How Banks Calculate Income

One of the major problems faced by people who have an unusual employment situation is how the banks work out their income when it fluctuates on a weekly basis.

As a general rule, banks will use the most conservative method of assessing your income.

For example, if you provided two recent payslips and your group certificate and they show two different incomes then they will use the lower of the two.

Unfortunately, this means they often don’t use your actual income!

In particular, people who receive overtime income, work on a casual basis or who have received a pay rise in the last year tend to be assessed at a lower income than they are actually earning.

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