Banks considering alternative income sources when assessing mortgage applications: Smartline
There’s good news for first-time investors and buyers, with banks now considering casual and secondary incomes when assessing mortgage applications, according mortgage advisors Smartline.
The mortgage broking franchise says the banks are now looking favourably at a variety of income types when considering home loan applications, having tightened their lending rules in the fallout from the GFC.
“While overtime, bonuses and second jobs used to be regularly accepted by lenders, unfortunately this changed when the GFC hit,” says Smartline managing director Chris Acret.
“Those with casual or contract employment or who were self-employed also found it much more difficult to secure home financing as banks becoming very risk adverse.
“Thankfully, lenders are increasingly ‘normalising’ their lending criteria and while we haven’t yet returned to pre-GFC levels, it’s moving in the right direction,” he says.
The move will be welcomed by those investors and buyers who are self-employed or on contract or casual employment.
According to Smartline, some lenders will now also consider the income of a person working in a temporary, casual or contract position after three months, particularly if the applicant works in certain roles, such as an accountant, teacher, nurse or engineer.
This is because banks have “sensibly” revised their view on income types in light of changing work practices.
“The full-time position that was guaranteed for life is slowly becoming less and less relevant as both employers and employees look for greater flexibility in the workplace and in their lives,” says Acret.
However, he warns that different lenders could have quite different criteria when it came to assessing income types.
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