Many Aussies are choosing casual employment over full-time jobs, given the opportunity to work fewer and more flexible hours. Others are taking casual jobs out of necessity.
Unfortunately casual workers may find it harder to secure a home loan due to peaks and troughs in their employment income. It begs the question, can a casual employee get a home loan?
The good news is that there are lenders in Australia who provide home loans to people with casual employment. By understanding the various options available, it may be possible to secure the best deal available to you as a casual worker.
Who and what is a casual employee?
Casual employment isn’t restricted to any one industry. Generally, you’re considered a casual worker if your employer has provided no firm commitment about how long or often you will be employed. In a nutshell, casual employees usually work hours that aren’t regular and do not get any paid leave, including sick leave and annual leave. A shorter term casual employee can leave their employment or be terminated from their job without any prior notice, unless otherwise stated in a registered agreement or employment contract.
On the other side of the coin, casual workers usually get casual loading. This means casual workers may be paid slightly more to compensate for the lack of other benefits.
If an employee chooses to stay with an organisation for an extended period of time - such as more than 12 months - they are considered as ‘long term casuals’ and may be eligible for some benefits.
How much can you borrow as a casual employee?
If you’re looking for a home loan on casual employment, some lenders allow you to borrow up to 90% of the total property value provided you’ve been employed for at least six months.
Others in a strong financial position who have been employed for 12 months or more may find they can borrow up to 95% of the property value.
Another option is guarantor loans, where someone offers financial backing if you default on your loan.
Lenders who provide home loans to casual employees understand that there are multiple factors to consider when it comes to assessing the applicant’s income. So, it is vital to put together a good proposal and as much supporting evidence as possible to strengthen your application. It may also be sensible to seek independent advice.
How to improve the chances of getting a home loan as a casual employee?
Save for a sizable deposit - If you can provide at least 20% of the property value as a deposit, you may be able to prove to your lender that you’re capable of saving and are financially reliable. This may improve your chances of getting a home loan with casual employment.
Choose lower-risk areas - By choosing a location that isn't too pricey - and therefore needing to borrow less, the chances of you getting a home loan could increase.
Stay in the same line of work - While being employed at the same company for a long time could increase your chances of getting a home loan, staying in the same line of work may help too. For example, if you’ve recently switched to being casually employed or have changed jobs, there’s a chance you could still qualify for a home loan provided you’re working in the same industry or employment role.
Check your credit report - If your credit score isn’t too healthy, you may want to hit pause and improve your credit score first before applying for a home loan. However, it’s important to note that the credit score considered while assessing your home loan application differs from lender to lender. So, you could consider comparing your options before choosing a home loan.