Home loans when you are receiving Workers Compensation
Worker’s compensation is income paid to an employee from their employer because they have sustained some kind of injury in the course of performing their duties at work. This payment is made upon the condition that the employee will not take the employer to court for negligence; these payments can be made as a lump sum or in increments, depending on the type of injury sustained and whether it’s a permanent impairment.
We often see industries involving a lot of physical work like; mining, construction and electrical, having a high number of worker’s comp claims.
Am I eligible for a home loan?
- Your claim must not be in dispute.
- Most lenders will want to see that you have a clear credit history, but we work with lenders who will still accept your loan, using worker’s comp even without a clear history.
What is the required evidence?
- A letter from the employer confirming that you are still employed in your role.
- A letter from the worker’s compensation provider confirming the terms of the payment; that is the time over which the payments will be received and what the conditions are once you return to work.
- A Doctor’s certificate.
- Evidence of your current income or income prior to your injury.
What do banks consider when approving a loan?
- Your loan to value ratio- most banks will only allow you to borrow up to 95% of the value of the security depending on your individual circumstance, and you must be able to show that the payments will be ongoing for at least 5 years. If you can show that you are returning to work in less than 2 months some banks will let you borrow up to 90% of the value of the property; but will not settle the loan until you confirm you have returned to work.
- Depending on the bank they may consider 100% of the payments from your income protection claim, whilst some lenders will allow you to use 50% of these claims. We work with both types of lenders, so let us to do the hard work for you!
- The type of disability will also be relevant; most lenders are more likely to accept payments made for permanent disability as opposed to temporary; as the latter is dependent on the type of injury.
- Generally, for worker’s comp income to be used you need to show that it is ongoing and reliable.
Let us help you find the right lender for your worker’s comp situation. Speak to one of our expert brokers today to see how we can help!