The Rise of Side Hustles: Navigating Job Changes and Home Loans in Australia
A recent report from the Australian Bureau of Statistics (ABS) reveals that nearly one million Australians are now juggling multiple jobs, marking an unprecedented trend in the workforce. This phenomenon is largely driven by enterprising individuals who have embraced the idea of side hustles. Many are either balancing a traditional 9-to-5 job while nurturing a personal project or undertaking supplementary gigs, such as food delivery or babysitting, through platforms like Kiddo for additional income.
Financial incentives are at the forefront of this shift; a study by Compare the Market shows that monetary gain is the primary motivation for Australians contemplating a job change in the next year. Approximately 69% of respondents indicated they are considering changing roles, with 51% highlighting salary as their major influence. Other motivating factors include the option for remote work (14%), desire for reduced hours (9%), career development opportunities (11%), and the need to escape toxic work environments (6%).
While the evolving job landscape offers diverse income-generating opportunities, established institutions, particularly banks, are still adjusting to these changes. This begs the question: how do career choices affect one’s ability to secure a mortgage?
Traditionally, banks have been cautious about lending to individuals in occupations they perceive as "high risk." This classification often pertains to professions with fluctuating incomes or those facing industry-specific challenges that may jeopardise job stability. For instance, freelancers and small business owners may find it more difficult to obtain loans due to income variability.
However, prospective homebuyers can enhance their chances of securing a loan by partnering with someone in a more stable employment situation—a spouse, sibling, or parent who is committed to co-owning the property might be beneficial.
It’s worth noting that those who have frequently changed jobs within the past year may need to establish a record of longevity with their next position to prove their reliability to lenders. It’s crucial for applicants to demonstrate a consistent income stream so that lenders feel confident in their repayment capabilities. Additionally, individuals just starting a new job or working under short-term contracts may be perceived as higher risk compared to borrowers with established job security.
Despite these challenges, there is hope for those navigating the lending landscape. Each bank has varying criteria for loan eligibility, meaning that while one lender might decline an application, another may approve it. Having a solid deposit and a robust credit history can also bolster one’s position.
Lenders favour employment in sectors associated with stability and demand, such as healthcare and professional services. Professionals like doctors, nurses, lawyers, and accountants often bypass lenders’ mortgage insurance, even without a complete 20% deposit, facilitating quicker entry into the property market.
However, it’s essential to remember that interest will accrue on the entire loan amount, meaning those able to present a larger deposit can reap additional financial benefits.
As Australians continue to adapt their working lives, the implications for home loan acquisition will grow increasingly complex. Understanding these dynamics will be key for both job seekers and potential homebuyers looking to navigate the evolving mortgage landscape.
