Historically, banks and other lenders have favoured borrowers who have been employed by the same employer for a long period of time. A borrower with a long tenure at one organisation is easily able to show that their income is stable and consistent, which is attractive as it is deemed a lower risk to the lender.
Conversely, ‘job hopping’ – which was previously frowned upon – has been popularised by a younger generation who will change jobs in search of professional and personal development and better pay, and lenders are catching up with the times.
If you have recently switched jobs but you want to apply for a home loan, can you still get one? Here’s what you need to know.
I am about to change jobs. What are my chances of being approved for a home loan?
If you are transitioning into a new role permanently (i.e. not a fixed-term contract) most lenders will be happy to proceed with your loan application.
This will differ if you are transitioning into a casual role, as you will usually need to be there for at least six months before lenders will feel comfortable approving your application. If you are a casual employee and you are also new to your industry, you will likely need to have been in that job for at least two years to be considered an appropriate candidate for a loan.
How long will I need to be at my new job for a lender to take my application seriously?
Lenders will consider the personal circumstances of every applicant, so depending on your financial position, you could have been at your job for just one day and still be a suitable candidate for a loan.
As the younger generation normalises a culture of seeking better compensation and workplace culture, lenders have been relaxing their lending criteria for borrowers who can prove their reliability in other ways, such as consistent employment within one field, a strong history of saving and investing, little to no debt and a strong credit score.
What can I do to increase my chances of being approved?
If you are concerned that your application may be knocked back, you can do some things to best position yourself before submitting your loan application.
Engage a mortgage broker
Mortgage brokers help people secure loans every day and will be best placed to help match you with a lender who will meet your needs. If a broker does not believe a major bank will lend to you, they may work with a specialist or boutique lender who may be more appropriate.
Request a copy of your credit file
Requesting a copy of your credit file is simple and free. It can help you assess if there is room for improvement or if you are in a solid position to apply for a loan. A borrower will consider your credit file when assessing your loan application, so if you haven’t been at your job long but you have a strong credit history you will already be better off.
Clear your debt
Your credit file will give you an overview of any outstanding debt you have, such as personal loans or credit cards. The fewer liabilities you have, the more likely you are to be approved for a loan, so clearing as much debt as possible before submitting a loan application will be helpful.
If you have recently started a new job and are thinking of applying for a home loan, speak to one of our experienced mortgage brokers on (07) 4052 0750 who can help to set you up for success.