Loans and change of employment

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From: Anonymous


I apologise for the anonymous post but I didn't particularly want my work email showing up.

Having just read the "calling in" loans thread, it has raised a question.
In the past I have heard that contractors (as opposed to salaried employees) have greater difficulty obtaining property loans. Also that banks can call in a loan based on whatever, including a change in employment.
My partner and I are currently salaried, but I have been considering a contracting position - significantly more money.
We currently have 2 loans (PPOR & IP), settle on another IP on Friday, and have already exchanged on an OTP IP due for settlement in Mar 03.
Does anyone have any information on how these existing loans, and future loan applications will be viewed if I change employment from salaried to contract.
Or is this very "bank" specific?
RMcK
 
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Reply: 1
From: Rolf Latham


Hi RMCK

Assuming that your contracting role is in a similar industry to what you are employed in then your real risk in today's climate is next to zero.

If you have Lines of Credit your risk is a little higher, though still negligible, but again MANY lenders see a move from Perm employ to Contracting as NOT materially affecting their risk.

If you are currently and IT person but you are moving into the plumbing business then you may have a challenge, IF it came to a review with LOCs. Generally term loans are pretty safe from being called in while you maintain your side of the bargain and property values dont go to custard.

The OTP I would have some concerns about simply because you will ned to make a new finance app near settlement. Again you may get through with a standard loan. Worst comes to worst if you have sufficient equity for deposit then a no docs loan will get you out of strife.

Much depends on the economic climate at the time.

Ta

Rolf
 
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Reply: 1.1
From: Peter Boyce


Hi RMCK

I have been contracting for a number of years now and agree with Rolf. Actually I had a change of employment a few years ago where I went onto salary and had to wait for my 3 months 'probation' to end before my bank would give me a loan to buy a house to live in. This was in direct contrast to my historically being on contract and getting finance easily. I didn't change industry only cities...so go figure!


Peter
 
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