So my job really matters? How it impacts you getting a loan.

When it comes to your employment and applying for a home loan, the nature of your employment matters.

Not necessarily the 'what' you do but the 'how' you do it.

By this I mean are you are 'employee' (what banks call PAYG with a set annual salary for which you are paid a specific amount every fortnight or month) or are you 'self employed'.

These days fewer people have the standard 9-5 job on a fixed salary. Some people contract, others run their own business, some people work part time or casual while others are employees of their own company.

From a bank point of view the nature of your employment matters. Think about it. A bank considers a customer in terms of the level of risk. An employee on a fixed income is assessed purely off payslips. However, someone who is self employed or has variable employment needs to provide more information to the bank to give them the certainty that it will not be a risk to give you the loan at the level for which you are applying.

The outcome may be the same in terms of the loan being approved. The type of work you do doesn't demand a higher interest rate or more fees. It will however determine what information the bank will ask from you to help them in assessing how much they will lend to you.

As someone thinking about buying a home or refinancing, it is therefore important to understand what it is that a bank will want to see from you when you go to apply for a loan. If you are self employed, 2 years of income is often considered (and required by way of tax returns) in assessing your income. What does this mean if you have had a noticeably difference in income between the two financial years?

If you are casual or part-time, it will be important to prove how long you have been working with any given employer, the consistency of work and income and what this looks like over a 12 month period of time.

And if you are 'simply' an employee, while your situation may be the simplest in terms of proving the income you earn, it is important to understand what a change of job could mean in terms of the timing of applying for a new loan.

Finally if you work overtime or receive allowances, it is important to understand what percentage of these benefits a bank will include in working out how much you can borrow. This can often be dependent upon the industry in which you work and how fundamental these payments are as a function of your role.

In a nut shell, no two situations are the same. It is important to avoid getting caught out by not understanding how a bank will look at your job or your income.

You should never assume - especially when it comes to taking out a loan to buy a home or refinance.