Mortgage Myths (Part 2)

Lenders don’t like casual employees

• Not necessarily true. Lenders add certain caveats to casual employee lending to mitigate risk, however they do lend to casual employees.
• For example, most lenders will require casual employees to be employed for a minimum of 6 months to provide a level of certainty that employment is not a ‘flash in the pan’.
• Additionally, they may ask for 6 months of payslips and annualise this figure to determine an ‘expected annual salary’.
• An educated broker will know different lender policies and recommend a suitable product

In a rising rate market, you should always fix a home loan

• In our opinion, fixing your home loan is a strategy we generally don’t advise. Often, you’re leaving money on the table that could be in your pocket. However, this question is client specific and depends on each individual scenario.
• As an example, current fixed rates are over 5/6%, which is a full 1 percent higher than the current variable rate. Yes, rates are rising, but the top range of the rises is unknown.
• Additionally, rates are predicted to drop from July onwards in 2023. Therefore, you may have locked yourself into a high rate unnecessarily.

It’s easier to apply for a home loan with your current bank

• As brokers, we see this type of behaviour regularly. It’s understandable, you’re familiar with your bank and you’re comfortable with the app and online experience – so why change?
• When seeking a home loan, it’s our view that it’s always worth getting a second opinion.
• For example, you may be able to borrow $100k more with another bank if their policy differs or they have a greater risk appetite for certain types of income. This could be the difference between purchasing your dream home or missing out on it all together.