Lenders are willing to offer finance to people with different types of employment, however, it is important to understand that the requirements vary for each employment type.

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Full-time Permanent

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A full-time permanent position that you have been in for many years is the most preferable for a lender, as it shows that you have a regular income.

Most lenders require two pay cheques to confirm your income, and ideally, you will not have changed employers in the past six months. However, assuming you have been working in the same industry for a long period, lenders will accept applications from those in new positions and even during probation periods.

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Part-Time Permanent

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Most lenders will assess your permanent part-time income in the same way they do full-time income.

As long as you have either been with the same employer or in the same industry for a long period, two paycheques are normally required, unless you work irregular hours.

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Casual

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It is possible to get finance with a casual position, however, lenders will want to see that you have been in the position for at least six months.

You will probably need to provide 6-12 months’ worth of bank statements verifying your casual income.

Some lenders are willing to accept new casual positions if you have been working in casual positions in the same industry for at least 12 months.

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Contractors

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Contractors are becoming increasingly common, and many lenders understand this. However, most lenders treat contractors in the same way as casual staff.

There are also different kinds of contractor income, which can vary between being a self-employed contractor, PAYG or a sub-contractor.

Under ABN

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Contractors receiving money on an ABN are treated as self-employed, and they have to provide proof of income in the same way that a self-employed individual would, which is generally two years of individual tax returns or company tax returns.

PAYG

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Contractors receiving payment as PAYG must be on a contract for a minimum of six months, and most lenders will use an average of 46-48 weeks of income for loan servicing, as contractors do not get paid for annual and sick leave.

PAYG Fixed Term

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Under a PAYG fixed-term contract, the contractor will have a fixed start and end date and might be receiving annual and sick leave. Lenders are likely to require you to have been on the job for at least six months, but your salary can be used in full.

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Self-Employed

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While it is often considered harder for those who are self-employed to obtain finance, if you have a well-established business, the process is not always difficult. Various lenders often specialise in different employment types, and each will have different requirements.

Lenders will generally want to see two years’ worth of tax returns or notices of assessments.

Different lenders will weight each year of income differently; however, many will take the average income of those two years.

Another consideration for the self-employed is that your taxable income is not always the final amount a lender will assess. It is possible to increase your assessable income through add backs.

Add backs include things such as depreciation, interest, one-off expenses, additional superannuation contributions, rental property expenses or trust distributions. Effectively, a lender will recognise that these are expenses used to help legally reduce your tax liability, and they might add these back to your assessable income.

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