Question: I have recently changed jobs (two months ago) and my wife is expecting our first child in the next six months. With the housing market ripe for the picking, and having saved a 15% deposit, we’re thinking of buying our first home.
My concern is this: what is the general consensus from the banks when assessing a loan application where someone has been in their current job for less than year? And considering my wife will be on maternity leave in around six months, will they take her current salary into account when assessing how much we can borrow? I’ve also heard banks are more stringent with these scenarios than non-bank lenders… is this true?
Answer: Firstly, congratulations on your baby! It’s an exciting time, but also a time when you should be careful with your numbers. It’s also a great time to look at purchasing a home for your growing family – as long as it fits within your budget.
When assessing what you could borrow, all lenders and mortgage brokers would assess your serviceability based only on your current income.
Even though the baby is not due for a few months, and your wife is currently working, the plan is that she will be on maternity leave and you will be down to one income for a period of time.
Neither you nor the lender know 100% what will happen (will your wife go back to work full-time, part-time or not at all?), but they need to ensure that they aren’t putting you into a position of hardship. All lenders, no matter whether they are bank or non-bank, would hold the same view.
In regards your recent job change, this is where different lenders will assess you differently. It’s important to note that there is no general distinction between bank and non-bank lenders in this regard, but each lender has its own policy when it comes to length of employment.
Most will consider your two-month work history if you’ve been in the same industry for longer than two years. Some will want you to have completed your probation period, and some will consider the other strengths of your application; for example your deposit size, credit history and how much unsecured personal debt you have.
So, in summary, make sure that you have a good deposit, and I think you should talk to your mortgage broker about working out how much you can afford to borrow. I hope this allows you to purchase the home you want. Good luck!
Answer supplied by Michelle Coleman, BUZZ Finance (www.buzzfinance.com.au)
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