Impact of job change on Loan application

Discussion in 'Property Finance' started by Investments Seeker, 2nd Nov, 2018.

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  1. Investments Seeker

    Investments Seeker Member

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    Hi All

    I am after some advise, i have been considering changing jobs unfortunately i had already signed a contract for land due to be settled next year. Also the job will be a 12 month contract renewed every year. What does this mean for assessment with a family of 2 and partner still on permanent job.

    How long should i be on contract to be considered for the borrowing power assessment/.

    Looking forward to your feedback
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    When does the land settle? Is your new job the same industry as current, with no gaps? Are you in IT? A 12 month contract in IT is pretty standard and will be taken by most lenders BUT if it's casual, some may need 3- 6 months in the job to use the income.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    urgggh thats always a risk with any form of OTP I guess

    core questions

    Loan to value ratio ?

    if you partner has a very large income that can support the loan and your living costs as far as a lender assesses same etc , then it probably wont be an issue

    ta
    rolf
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    It's a risk, but probably not a big deal.

    If it's due to settle next year, then I'm going to guess it won't be in January, so it's still at least 3 months away. There's plenty of lenders that have no problem with this, even if LMI is involved.
     
  5. Investments Seeker

    Investments Seeker Member

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    Much appreciated for the input guys. Yes the settlement is expected around may - June so at 3 months will have passed on the new job.

    Its hard being torn between staying on a job that's nolonger right for you and new change given the committments already at play.

    The industry is the same so that won't impact the move , @Jess Peletier unfortunately not IT though

    Your input has brought things into perspective much appreciated
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    @Investments Seeker there's plenty of risks with buying anything with an extended period, but based on the info, changing jobs isn't going to be a big deal. What you've described is over 6 months. There aren't many lenders that would have a problem with this.

    I assume you're not getting a pay cut?
     
  7. Investments Seeker

    Investments Seeker Member

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    hi Peter

    Unfortunately there will be slight pay cut roughly 8k annually before tax

    It’s just that the other job is now really a drag hence desire to change
     
  8. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    $8k can make a big difference and we're in an environment where serviceability is tight. It might be prudent to get in touch with myself or one of the other brokers to make sure the change in income doesn't derail your purchase.
     
  9. Redom

    Redom Finance Strategist Business Plus Member

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    There’s a few lenders that allow you to use income from a solid employment contract. This deal should work so long as:

    - Your serviceability allows for a 50-60k hit associated with a drop in income of 8k p.a. Ideally your not relying on non bank lending parameters too.

    - LVR is <80% will help a lot. This probably helps manage most of the finance risk out of it.

    - Depending on when the land settles and how soon your into the new contract/transitioning; going to the right lender. For example, if you haven’t started the new job but are about to, NAB or Macq allow income to be used from the future job. Other lenders will take one payslip. While some will want to see a longer history.
     
  10. Investments Seeker

    Investments Seeker Member

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    Thanks Peter point noted it’s not as simple as a slight $8k it means much more in borrowing power lost which could definitely complicates things

    I also forgot this has an impact on current loans for refinancing to pull some equity. I guess the timing of the change completely moves in a direction of becoming too risky
     
  11. jazzsidana

    jazzsidana Mortgage Brokers - Investment Savvy Business Member

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    No Gaps and if same industry, should be ok most likely. However, long settlements always carry some kind of risk..

    Just to be conservative, I'll request the broker to check if loan can be serviced just on partners income and have it as a back-up in place if required!..
     
  12. beachgurl

    beachgurl Well-Known Member

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    Will you be a PAYG contractor or an ABN contractor? The former is fine but the latter will make lending more difficult
     
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  13. Investments Seeker

    Investments Seeker Member

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    It will be a PAYG contractor.
     
  14. Investments Seeker

    Investments Seeker Member

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    Thanks Jazz, that’s a good point to be sure we don’t get stuck