Casual Employees Guide
Home Loan for Casual Employees
Going to purchase a home but because you're in casual employment, your bank knocked you back? If you want a home loan with a casual job, this may be the appropriate post for you. Let's begin.
Basics of home loans for People with casual jobs
More than 25 per cent of Australia's workforce are casually employed, just under 2.5 million people, according to the ABS. Most of these people work in the retail and hospitality sectors in which being a casual worker is quite reasonable.
Sadly, the banks are packed with full-time employees, so they don't think much about casual jobs, and this is also reflected in their lending policies – some banks would reject your home loan if you are casually employed as they believe it's so much higher risk than offering a permanent employee a loan.
Around 81% of casual employees are likely to be with their current employer in 12 months compared to about 93% of permanent employees," according to the government.
Thankfully, some lenders understand Casual Employment to give Home Loan and are okay with your work.Based on your situation at work, some lenders can give you a home loan as a casual employee if you are:
- Full-time casual: you are considered a full-time casual if you work full time in the same regular hours each week
- Part-time casual: if you work casually in irregular hours, or part-time, for instance, 30 hours in one week and then 15 hours in another week.
Example: How could a casual teacher be eligible for a home loan?
Working as a teacher or as a casually substitute teacher will have multiple benefits, you have the flexibility to not work in school holidays, and you may get paid more than full time teachers in some cases. But perhaps you've noticed that the banks struggle to understand your earnings ... What for?
- You may work just 40 weeks instead of 52 weeks of a year.
- You may work in several different schools, but all of your payslips are from one education organization.
- Due to the recent school holidays, the Year to Date (YTD) number on your payroll may not reflect your actual salary.
- During school holidays, you attempted to apply for a home loan, and you might not receive any payments, making it even more challenging to prove your income.
- Several lenders use your PAYG Report (also known as a group certificate) or your weekly income over 40 weeks to measure your real income.
How can you get approval for a Home Loan with a Casual employment condition?
You may have found it challenging to get your home loan approved when you're a casual worker, and the banks may be worried that you don't get a holiday leave or sick leave.
Or they may have asked how the part-time, casual earnings go up and down each week... Many banks think you'd be the very first to go as a casual employee. if your employers were to start making people redundant
We may be able to help casual workers, including:
- Established casual workers with Unregulated hours
- Full-time casual workers
- Casual teachers & nurses
- People working in a variety of casual jobs
What would be the deposit expected by casual workers?
If you are in a casual job, some lenders expect to have with as little as a 10% deposit (exclude other fees) , and if you have been in your role for over six months, you might be able to get a higher loan amount.
How might a lender measure a casual salary??
Each lender has its way to use casual income on an application for a home loan.
- Although some banks may want to see your last two years of PAYG Summaries (group certificates),
- others may get your payslip's Year To Date (YTD) gross income to calculate your annual salary.
- The method of the YTD calculator is used if you have been working for only a few months.
Normally, lenders & banks will want to check at least one of the following documents to measure your casual income:
- Approximately three-month wage income transfers to your bank account
- A payslip indicating more than three months of Year to Date income
- One payslip showing less than three months Year to Date earnings, tax return, PAYG summary.
- Letter from your work with current jobs/employment with current employment/length of employment and break up of Year to Date income and PAYG payment summary or tax return.
Which banks or lenders are suitable for people with casual employment?
Large banks, smaller banks and non-banks all evaluate your home loan while you're working casually. Still, it isn't straightforward to know precisely the exact outcome without considering the overall situation. If you have been working casually for three months, few banks might approve your application for a home loan!
I would seriously recommend that you have your required documentation together when you speak to your mortgage broker, including:
- 3 Most Recent Payslips
- Last 3 Years PAYG Statement (often defined as Group Certificate)
- Past 3 Months bank Statements (Where you are paid)