Any lender will look at what type of employment you have, not just what income you get, when you apply for a loan. Your employment history gives them an indication of your likelihood to continue to work, and of course, pay your loan.
Here is a guide to the main types of employment and how lenders look at them when assessing your loan application.
Full Time
You work for the same employer ‘full time‘, that is, a minimum of 38 hours each week.
If you are away from work for holidays, or because you’re ill, your employer will still to pay you.
Lenders like full time employees because your income is consistent and there’s a higher chance that you will stay in the same job once they have given you the loan.
Part Time
Part time is pretty much the same as full time, with the only difference being that you would work fewer than 38 hours each week. Lenders look favourably on part time employees too.
Casual
Casual sounds like a more flexible type of employment and it is.
Hours each week may vary and there’s no holiday pay or sick pay. Income is usually higher as it is ‘loaded’ to cover for the lack of holiday and sick pay.
Lenders are often a bit more cautious with Casual employees as their income can vary from week to week. If you have been with the same employer for more than 12 months, lenders are a little more relaxed but will consider the income in a slightly different way.
Length of time
As well as the type of employment, lenders look to see how long you have been in the same job or industry.
If you have been in the same industry for 2 years, you usually only need to have been in the same job for 1 complete pay period for part and full-time employees.
If you have switched industry, or have had time off between jobs then lenders usually expect you to have been in your job for 12 months.
If you’re casual lenders usually look for you to be in the same job continuously for 12 months
Key Points
- If you’re not sure of your employment type, talk to us at LendFirst and we’ll help you
- If you’re casual and haven’t worked continuously for 12 months, then talk to us as we may still be able to help
- If you’re thinking about buying your first home, think hard before you change your job or industry as it can affect your ability to get a loan
