Securing a home loan can be a challenge for anyone, but if you’re a casual employee, it might feel downright daunting. With the rising property prices in Brisbane and the sometimes precarious nature of casual work, lenders can be hesitant.
But don’t lose hope! With careful planning, the right advice from expert mortgage brokers, and an understanding of how to navigate the process, you can definitely secure a home loan.
In this guide, we'll walk you through the key steps, provide real 2024 data on the Brisbane property market, and offer practical advice for casual employees looking to buy a home. We’ll also share a case study to illustrate how it can be done.
An Overview of the Brisbane Property Market in 2024
The Brisbane property market has continued to rise steadily into 2024. According to CoreLogic, the median house price in Brisbane as of mid-2024 is around $800,000. This represents a growth of approximately 5% from 2023, driven by strong demand and limited supply. Units have also seen an increase, with the median price hovering around $480,000.
For casual employees, these rising prices might seem intimidating. But don’t worry—whether you’re earning a casual income or working on a casual basis, there are ways to make it work.
How Casual Employment Affects Home Loan Applications
Casual employment is becoming more common across Australia, and Brisbane is no exception. Many lenders, however, still favour applicants with full-time jobs because they see them as a lower risk. Casual employees face unique challenges because of their fluctuating income and less predictable employment arrangements.
Here's a breakdown of what lenders generally consider when assessing a casual employee for a home loan:
- Income Consistency: Lenders want to see that you have a consistent income, even if your hours vary. They might look at your last 12 months of payslips, bank statements, and PAYG summaries to assess this.
- Employment History: Lenders will scrutinise your employment history, particularly how long you’ve been in your current role. The longer you’ve been consistently employed, the better your chances.
- Deposit Size: A larger deposit can significantly improve your chances of approval. Most lenders look for a deposit of at least 20%, but a larger deposit reduces their risk and may even help you avoid Lenders Mortgage Insurance (LMI).
- Credit Score: A strong credit score is essential. It shows lenders that you’re responsible with credit and are likely to repay your loan. Make sure your credit report is in good shape before you apply.
- Borrowing Capacity: Lenders calculate your borrowing capacity based on your income and expenses. As a casual employee, your borrowing capacity might be lower than that of a full-time employee, but with the right approach, you can still secure the loan you need.
Loan Types for Casual Employees
As a casual employee, you might find that traditional home loans don't quite fit your situation. Fortunately, there are several alternative loan types that can better accommodate your financial circumstances.
Here are six loan options that could be more suitable:
Low Doc Loans
Low documentation (Low Doc) loans are tailored for borrowers who may lack the traditional financial records that lenders typically require. If your tax returns or PAYG summaries are inconsistent due to irregular hours, a Low Doc loan might be the solution.
These loans usually require other forms of verification, such as bank statements or a letter from your accountant.
Non-Conforming Loans
Non-conforming loans are offered by lenders who specialise in working with borrowers in non-traditional employment circumstances. These loans can be a good option if you don’t meet the stringent criteria of conventional lenders.
Although they might come with slightly higher interest rates, they provide more flexibility in terms of eligibility.
Fixed-Rate Loans
A fixed-rate loan allows you to lock in your mortgage repayments at a set interest rate for a specified period, typically between one and five years. This can be particularly advantageous if your casual income varies, as it offers predictable repayments, making budgeting easier.
Variable Rate Loans
Variable rate loans have interest rates that fluctuate with the market. While this means your repayments can go up or down, these loans often offer more flexibility, such as the ability to make extra repayments without penalties. This could be beneficial if your income allows you to pay more during higher-earning months.
Guarantor Loans
A guarantor loan involves having a family member or close friend guarantee your mortgage. This can be particularly useful for casual employees, as it provides the lender with additional security.
The guarantor’s property or savings are used as collateral, which can help you secure a loan with a lower deposit or even avoid Lenders Mortgage Insurance (LMI).
Split Loans
A split loan allows you to divide your mortgage into two parts—one with a fixed interest rate and the other with a variable rate. This gives you the benefits of both loan types: the stability of fixed repayments and the potential savings from a variable rate. It’s a good option if you’re looking for a balance between certainty and flexibility.
Steps to Qualify for a Casual Employment Home Loan
Navigating the home loan application process as a casual employee requires some extra care. Here’s how to improve your chances:
1. Gather Your Financial Records
Start by gathering all your financial records. This includes payslips, bank statements, tax returns, and PAYG summaries. Lenders will want to see proof of your income over an extended period. If you’ve been in your current role for a while, this will work in your favour.
2. Improve Your Credit Score
Your credit score plays a crucial role in your loan application. If your credit score isn’t where you’d like it to be, consider taking steps to improve it. This might include paying down existing debts, ensuring all bills are paid on time, and checking your credit report for errors.
3. Save a Larger Deposit
While it can be tough, saving a larger deposit can significantly boost your chances of loan approval. A larger deposit reduces the lender’s risk and may allow you to borrow more. Aim for at least 20%, but the more you can save, the better.
4. Consider Specialist Lenders
If traditional lenders are hesitant, look at specialist lenders who are more flexible with non-traditional employment circumstances. These lenders might be more understanding of your casual employment status and can offer more suitable loan products.
5. Get Pre-Approval
Consider applying for pre-approval before you start house hunting. Pre-approval gives you a clear idea of how much you can borrow and shows sellers that you’re a serious buyer.
Common Casual Employment in Brisbane
Casual employment plays a significant role in Brisbane’s diverse economy. Whether you're in hospitality or the arts, there are plenty of casual roles that offer flexibility and opportunity.
Let’s break it down:
- Hospitality Workers: Brisbane has a strong hospitality sector, with many restaurants, cafes, and bars employing casual staff. This is especially true in popular areas like Fortitude Valley, South Bank, and the CBD, where nightlife and dining are vibrant.
- Retail Assistants: Retail is another significant sector in Brisbane, with shopping centres like Westfield Chermside, Queen Street Mall, and various boutique stores often hiring casual workers for customer service and sales roles.
- Tourism and Event Staff: Brisbane hosts numerous festivals, conferences, and events, creating a demand for casual staff in tourism and event management. Major events like the Brisbane Festival and Riverfire often rely on casual staff.
- Healthcare Assistants: Casual roles in healthcare, particularly in aged care facilities and hospitals, are common. With an aging population, demand for healthcare workers, including casual positions, remains steady. For mortgages specific to healthcare workers, visit our guide by clicking here.
- Teachers and Tutors: Casual teaching roles are common in Brisbane, including relief teachers (substitutes) and private tutors. Schools often hire casual teachers to fill short-term gaps. For teacher-specific home loans, click here.
- Construction Labourers: Brisbane’s ongoing infrastructure projects and residential developments create a need for casual construction labourers. This sector typically sees a demand for flexible workers who can be brought in for specific projects.
- Creative Industry Workers: Brisbane has a vibrant arts and creative scene, with many artists, photographers, musicians, and other creative professionals working on a casual or gig basis. Areas like West End and New Farm are known for their creative communities.
- Delivery Drivers and Couriers: The rise of e-commerce has increased demand for delivery drivers and couriers. Casual roles in this field are often available through companies like Australia Post, Uber Eats, and other logistics firms.
- Administrative Assistants: Many businesses in Brisbane, particularly in the corporate sector, hire casual administrative assistants to help during busy periods or to cover staff absences.
- Fitness Instructors: With a strong fitness culture, gyms and fitness centres in Brisbane frequently employ casual fitness instructors to lead classes or provide personal training. This is especially common in boutique fitness studios and larger gym chains.
Case Study: How Sam Secured His Home Loan
Sam, a Brisbane-based graphic designer, had been working on a casual basis for three years. With an hourly rate that varied from week to week, Sam was unsure if he could qualify for a home loan. He approached Zest Mortgage Solutions for advice.
After reviewing Sam’s financial situation, we advised him to focus on improving his credit score and saving a larger deposit. Sam followed this advice, and within a year, he had saved a 25% deposit and improved his credit score significantly. We then guided him to a specialist lender who understood his non-traditional employment circumstances.
With our help, Sam secured a home loan with a competitive interest rate and is now the proud owner of a home in Brisbane’s northside.
Chat with Zest Mortgage Solutions
Sam’s story is just one example of how we’ve helped casual employees in Brisbane achieve their homeownership dreams. If you’re in a similar situation, why not see how we can help? Contact Zest Mortgage Solutions at (07) 3461 6499 or visit our website at www.zestmortgagesolutions.com.au to get started.
FAQs
How can I improve my chances of loan approval?
Improve your credit score, save a larger deposit, and consider specialist lenders who understand non-traditional employment circumstances.
How much deposit do I need as a casual employee?
While 20% is standard, a larger deposit will improve your chances of approval and may help you avoid Lenders Mortgage Insurance (LMI).
How does a casual income affect my borrowing capacity?
Casual income can lower your borrowing capacity since lenders prefer the stability of full-time employment. However, with a strong application, you can still secure a loan.
Should I get pre-approval?
Yes, pre-approval gives you a clear idea of how much you can borrow and shows sellers you’re serious. It’s a good step to take before house hunting.
What if my application is denied?
If your application is denied, don’t panic. Consider working on improving your financial position and reapplying later, possibly with the help of a specialist lender.
Final Thoughts
Getting a home loan as a casual employee in Brisbane is definitely within reach with the right approach and a bit of preparation. By understanding your options and working closely with experienced professionals, you can find a loan that suits your unique situation.
If you're ready to take the next step or have any questions, the team at Zest Mortgage Solutions is here to help. Give us a call at (07) 3461 6499 or visit our website to get started. We’re committed to making your homeownership journey as smooth and straightforward as possible.
