How long do I need to be employed in a casual role for my income to be considered for my first home loan?
At FHBA, we get asked this question a lot. A lot of aspiring first home buyers are uncertain about the minimum duration of their employment in a job that has irregular hours. The good news is that it is definitely not 12 months, as most would-be first home owners consider that to be the case.
A person is a casual employee if they accept an offer for a job from an employer knowing that there is no written commitment to ongoing work with an agreed pattern of work, the hours could range from 1 hour of work per week to 50 hours of work!
What is the minimum employment duration?
At FHBA Mortgages, lenders on our panel could consider your income from your casual job if you have been employed for a minimum of 3 months in your current job. If you have only recently started your casual job (i.e. in the last few months) your income from this job could still be considered if you combine your current job and previous job for a combined total of 6 months. There are two ways you can qualify:
- casually and/or temporarily employed with the same employer for a minimum period of 3 months; or
- casually and/or temporarily employed in the same industry and/or employment role for a minimum period of 6 months.
How is my income calculated?
If you are employed in a casual role, the lender will calculate your income differently as opposed to being employed in a salary position where your remuneration is defined over the course of the year. There are two ways lenders can calculate your income from a casual job:
- annualise your YTD (year to date) income from your payslip, by calculating how much you have earned since the start date of your casual job, if you have changed jobs, the lender will add your previous employment’s income to the current and annualise the total, as long as you are employed in the same role; or
- annualise your YTD income and then shade it by 80% or over 48 weeks. Some lenders do this because they anticipate that you may not be working at the same level throughout the year by adjusting for sick & annual leave, and by adjusting for holiday periods when you may not be working.
Are there any restrictions?
Absolutely not, you won’t be penalised because you are in a temporary/casual role. You will still be eligible for the relevant Government Schemes and the State Government incentives.
As a casual employee you will still be able to borrow up to 95% of the property value, in fact your borrowing capacity may even be higher considering your casual pay rate may be higher than that of someone who is in permanent position.
How can I determine if I am eligible and how much I can borrow?
Given the fact the casual employees are faced with uncertainty in terms of hours worked, it is a good idea to consider speaking to an expert to determine if a home loan will be the right for you based on your current employment situation.
At FHBA Mortgages, we can help you not only by determining whether your casual employment income, but by also maximising the income that can be used to increase your borrowing capacity. Simply visit our FHBA Pre-Approval section to get started on a obligation & cost-free assessment of your casual employment income and the amount of income that can used to maximum the borrowing capacity so you can achieve your dream of owning your first home.
Written By,
First Home Buyers Australia.
