How To Get Approved For A Casual Employment Home Loan

Receiving a loan as a casual employee isn’t as direct as if you were employed full time, or even long-lasting part-time.

There are several disadvantages to obtaining finance as a casual employee. Firstly, your hours can vary greatly week to week which can have a direct impact on your earnings. This of course is not ideal, especially if your hours are reduced to a point where you’re just covering basic living expenses. In extreme cases, your hours might be removed altogether which can cause you to be in a position of not being able to meet repayments.

Secondly, as a casual employee, you’re not entitled to sick leave or holiday leave. This can become a challenge especially during offseason and during times of extended periods of unforeseen illness.

These are the two main factors that lenders don’t look at casual income in the same light as permanent income.

How is casual employment defined?

Casual employment isn’t clear by a set number of hours, or a least amount of hours per week, its merely by definition themself. When looking for finance, most mortgagees will request payslips to prove your salary.

Payslips for people working on a casual basis usually have no mention of sick, or yearly leave. This isn’t constantly the case as payslips vary between employers, but it can be one way to control the nature of your work and whether or not you’re permitted to leave or if you’re hours are steady.

What about permanent part time?

Permanent part-time is looked at in the same way as permanent full-time income. Unlike casual employment if you’re permanent part-time, you’re basically guaranteed a certain number of hours each week.

Unlike casual employment lasting part time workers are guaranteed a set amount of time per week. Any hours worked in addition to this are regarded as overtime, whereas casual employees, simply receive any hours worked at the regular pay rate.

Of course permanent part time employees still receive annual leave, and sick leave.

What about contracting?

Contracting is common practice within certain industries, such as IT.

Many contractors have an agreed short term contract – 6 or 12 months and typically work at a day rate. Receiving finance as a contractor varies between mortgagees, as each individuals circumstances are usually somewhat different.

Getting a home loan as a casual employee

One of the main tests faced for casual employees when looking for finance for a home, (aside from fluctuations in salary), is the fact that many mortgagees need job stability. Most mortgagees require you to be in a work for at least 12 months. Some lenders accept 6 months.

At Blueprint Financial Services, we have solutions to help you secure a home loan, even if you’re working in a casual role.

Having a reference from your employer is usually recommend but it won’t really change anything if you’ve only been in your current position for 3 months. Mortgagees instead will look more-so at your actual salary over that 3 month period, and then annualize that salary.

In other words, income can be verified either via year to date income shown on your payslip, or another way they can do it is by looking at your monthly bank statements and averaging the income out over a period of three months and then annualizing that figure.

How is borrowing capacity impacted for casual employees?

The answer to this is heavily dependent on the lender.

Obviously if you’re only working a small amount of hours each week your borrowing capacity won’t be great.

On the other hand, if you’re working 40 hours a week, full-time hours as a casual, then typically the hourly rate would be much higher than what you might get on a permanent full-time income – and if you’re consistently doing that, then your borrowing power is comparable with a full-time employee.

But, it’s all dependent on the consistency of your income.

Are interest rates higher for casual employees?

Interviewer: Okay. I’m guessing that people that apply for finance for a home loan, what are the differences with those loan types, Patrick? Would they have higher interest rates or would they be structured differently because of the employment type?

If you’re a irregular worker, you’re still qualified for the same home loans that you would get as a lasting employee, as long as your salary is enough to succeed for the loan amount. There’s really no difference in terms of the options, rates or fees.

Applying for a home loan as a irregular employee

In terms of what’s required to apply for a home loan, the standard application process would apply. Indication such as payslips and PAYG summaries from the prior year are generally wished, but there are some mortgagees that can also verify income via bank statements that validate salary credits coming into the account. Most mortgagees however, will still need payslips.

Every lender will calculate income differently. Some will simply annualize the latest payslip, based upon the year to date, as long as there’s at least three months history showing.Others will do the same, but also compare it to what you earned last year, and maybe take the lower figure. It generally depends on the lender as they all have their own policies and procedures.

Can Blueprint Financial services help me get a loan as a casual employee?

Absolutely.We have access to many different options and many different types of lenders who provide home loans and other lines of finance that are specifically designed for casual employees.