Can you get a home if you’ve just started a new job? In this article, we are going to tell you everything you need to know to get your home loan approved when you’ve just started a new job.
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Case Study: Christy's story
Christy had just moved from Brisbane to Cairns to start a new job, and at the same time, she found the perfect home. She’d signed a contract and was ready to apply for a home loan, but the bank said you’ve just started a new job, and there’s no way you can get a new loan. They told her she would have to wait 3 months. That’s when Christy hit us up, and we came up with an awesome solution to help her get her home loan. We are going to cover those strategies in this article.
What The Banks Want To See
Not all banks are the same when it comes to getting a home loan after starting a new job.
- Some lenders need to see you 6 months in the role at a minimum, with maybe 2 years of industry experience.
- Other banks will flat-out refuse you if you haven’t been in the role for at least 3 months, despite the industry experience you have.
- In certain situations, banks can say yes if you supply your full-time or part-time payslip. Others are even willing to take the employment contract.
- If you are a casual contractor on an ABN, the banks will decline your loan if you have just started your role as a casual contractor.
Since there are many options available, it is important to work with an expert mortgage broker who will sit down with you to really understand your personal situation.
What if I Have Been In The Role For A Month?
Once again, this depends on the lender. Some banks are okay if you’ve just graduated, started a new job, are still on probation and don’t have industry experience. Other lenders just want to see one payslip. There are lenders that are fine with just the employment contract and will only want to see the payslip before settlement! This will allow you to get your home loan approved quicker.
One thing to remember is that these policies also depend on how much deposit you have. Some lenders will accept one payslip if you have a 20% deposit. But if you have less than a 20% deposit, they will need to see you in the role for at least 6 months and have a minimum of 12 months of industry experience.
Read more: How much deposit do I need for a home loan?
How Do Banks Deal With Casual Employment?
Let’s say you’ve been doing IT or programming on a casual basis and have been offered a new job/contract. How do the banks deal with this if you’re going from one job to another?
Casual employment is definitely quite challenging. A lot of the time, the banks are worried that when you go casual, you might work 40 hours this week and then no hours next week. By virtue of the fact that it’s casual, they can really give you any hours they want.
When you are casually employed, industry experience is really essential. The blanket rule across pretty much all the banks after COVID has been a minimum of 6 months employment in a casual role. Before Covid, they were willing to take only 3 months in a casual role. But that has changed now.
Casual Employment Case Study: Jarvis' Story
We recently had a client, Jarvis, who has worked in several different roles as an IT contractor and got 12-month rolling contracts. Some lenders found it difficult to understand that it is the nature of the industry. We found an awesome solution with one of the banks that was willing to look at his last 6 months’ salary credits. So even though he’d been in the role for 1 month, we were able to use his 6-month salary credits from his last job and his new job and got his home loan approved.
So this is where you can see there’s a little bit of a grey area when it comes to casual employment. Not all banks are the same, and working with a mortgage broker like ourselves can help you get in the market sooner because, whilst you might get a no from one lender, another bank might be open and willing to assist.
Read more: Home Loan Casual Employment.
What if I Have A 30-Day Gap In Employment?
Having a 30-day gap in employment is pretty common when starting a new job, especially if you’ve moved interstate or changed jobs in December and might not start till January.
There are some banks like St George and Westpac, for example, who are fine if you’ve just started a new job recently. But they want to see your last 12 months of employment history on paper. Sometimes, they’ll even ask for your last pay slip to show some continuation.
Other banks like ANZ will not be able to help if there is more than a 30-day gap in employment. They want to see at least 3 months in that new role. So keep that in mind.
Now, the other thing to keep in mind is if you’ve just been accepted for a new job but are still with your old employer. The bank will decline your loan because most lenders want to see you in that new role you’ve accepted and usually one payslip. But there are circumstances where you can get an exception to work around that.
Read more: ANZ Pre-approval – the definitive guide.
How Much Can I Borrow?
How much can you borrow if you have just started a new job offering, you say. $100,000 a month?
In this situation, the banks look at different types of income differently.
- If you’re PAYG full-time, part-time Value is 100% of your base income.
- If you get bonuses, overtime or allowances, they’ll use between 80 to 100% of that income, depending on your industry. So if you’re an essential worker, e.g. a doctor or ambulance driver, they’ll potentially use 100% of that income. But for everyone else, they’ll reduce it by 20%.
- If you’re a contractor or casual employee, sometimes they won’t annualize your income. so although you might be working 52 weeks a year, they’ll use 46 or 50 weeks because they say you don’t get sick leave or annual leave.
- If you’re earning commission income, many banks will want to see that commission income over a 3- or 6-month period. So, if you’ve just started a role, it will be a bit of time before you can use your allowances or bonuses. We commonly see this with nurses who get a base salary and lots of overtime.
So keep that in mind: not all banks lend the same amount even though you are paid the same! It depends on your job.
Read more: Mortgage calculator – calculate your borrowing power
I've Just Started A Business - Can I Get A Home Loan?
It can be a little tricky if you’re self-employed and you’ve just started your business, or you’re a self-employed contractor on an ABN.
For most regular people who start a brand new business, the banks will want a minimum of 18 to 24 months of trading to be able to consider that self-employed income. This is because, with self-employed income, you don’t earn the same amount every month. You could get a substantial income, but then you’ve got to cover your expenses like insurance, taxes and other operating costs.
However, if you are in a specialty role like IT contractor, doctor, or engineer where you might have been doing PAYG Consulting and Contracting for the last 10 years and have a history of that, then the same contractor company says start invoicing us. There are ways around this; even though you’ve just started this structure, the banks can consider it. We have had a lot of success in the past using less than 12 months of income.
We had a customer who was working in film and television, and it’s very common for people in the film and television industry to work on a certain set or a project for a short period of time and then move. His role ranged from being on his own ABN to being a PAYG. The good thing is he’d been doing that for the last 10 years, so we could build up a story and show that for the last two years, his income was very consistent, and the bank was able to get comfortable with that.
The key takeaway here is that if you’ve started a new role, the bank will always be worried about your longevity and income over a set period. That’s why for self-employed clients they usually want to see at least one year’s financials or two years in some cases.
One of the biggest tips we could have here in this section is if you’re self-employed, even if you’re just starting your job, is to give as much data as possible to your broker or to your bank. Try to include all the jobs you’ve had in between to show that consistency of income. It gives the bank more confidence since they’re assessing you over the next 30 Years. They are not just looking at you today. They’re looking at your living expenses and what they might be in the future. They’re looking at the interest rates at 8 or 9% when they’re assessing it. So, they take a conservative approach when looking at your income.
Next Steps And Getting Your Home Loan
Here at Hunter Galloway, we deal with a lot of clients getting into the market for the first time after just starting a new role.
Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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