Job stability is a key factor that lenders analyse when considering whether to grant a home loan. It’s important to be able to demonstrate that you’ll continue to have a steady income so your lender is confident you’ll be able to meet those mortgage repayments for years to come.
The problem, particularly for millennials, is that employment patterns have changed enormously in recent decades; job stability is considerably lower than it was for their parents and the baby boomer generation. According to Deloitte’s 2016 Millennial Study which surveyed over 7000 millennials from nearly 30 countries, two-thirds of millennials are considering leaving their current workplace by 2020.
How does this decrease in job stability affect your chances of landing your first home loan, refinancing an existing one or finding a new one? Let’s take a look.It’s wise to think about what your employment situation and history looks like to banks and home loan lenders.
If you’re applying for a new home loan
When you apply for your first home loan, the bank or lender will want to see evidence of job security. Your chances will be much higher if you have a steady, full-time job. It will be more difficult (though not necessarily impossible) to secure a home loan if you’ve been working for your current employer for less than a year.
Another factor that may affect your chances of landing a loan is if you’ve been job-hopping for a considerable time. It’s more likely that you’ll be granted a loan if you’ve been in the same job for 12 months than if you’ve had five different jobs over a two-year period.
However, if you’ve only just started a new role, or had several different jobs in a short space of time, it’s still possible to secure a home loan – but you’ll need to demonstrate you’re in a strong financial position.
Having a wealth of industry experience works in your favour. For example, if you’ve had a few different positions in the last two years in the same sector and you’ve been promoted, this may indicate to lenders that you’re progressing.Your job situation can affect your chances of securing or refinancing your home loan.
If you have an existing mortgage
Your job situation can also impact your chances of restructuring an existing mortgage or securing a new one.
If you’ve recently begun a new job with a significantly higher salary, you might feel it’s time to upsize to a larger home or start making larger repayments to reduce your mortgage.
Lenders want to see evidence that you have stable employment, so it’s an advantage to wait until you’ve been in your current job for several months (at least longer than the typical three-month probation period, and longer than this if possible). If the job is full-time, you’ll optimise your chances of landing the loan (or getting the flexibility you’re after in a restructure).
Be prepared to provide evidence of your income and personal finances, including any assets you may have, to your bank or lender.
How can a mortgage broker help?
If you’re concerned that your employment situation will affect your chances of securing a home loan, a mortgage broker can help you out. At Smartline, we compare lots of different banks and lenders, so you’ll be able to find one that understands your situation and will be open to offering you a great deal.
You can contact a Smartline Mortgage Adviser on 13 14 97 for mortgage advice. Or complete our call request form and we’ll call you!