Impact of job change on Loan application

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

 

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.

 

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.

 

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

 

@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?

 

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

 

$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.

 

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.

 

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

 

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!..

 

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

 

It will be a PAYG contractor.

 

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