Starting a new job could make getting a mortgage harder – even if you will earn more. Here are the reasons and what you can do regarding this issue.
Why does switching jobs matter?
Switching to a new job may affect your chances of being accepted for a mortgage. Most lenders only offer you a mortgage if you have been in your position for a while.
Various lenders may accept you if you have worked there for three months or less. However, some mortgages are only available if you have been in your job for more than three years.
It depends on the acceptance criteria of the lender- their rules on who they are willing to offer a mortgage – which includes your age, employment status, credit record, and income.
Why would they turn you down?
Some lenders will think it is riskier to give you a mortgage after starting a new job. You could become unable to maintain your mortgage payments if you lose your job because of:
Redundancy: When your employer needs to make cuts, the newest employees are usually the first to go.
A probation period: Your company could end your contract without notice during this period (unless your role becomes permanent).
What if my new job pays more?
Even though a recent job move can reduce your chances of getting a mortgage, a higher salary can minimise the impact since it increases what lenders think you can afford to borrow.
You will need to prove your new salary, so ask your employer to verify it in writing.
What if my new job pays less?
Transferring to a new job with lower pay means that the amount you can afford towards mortgage payments will decrease.
This will mean that you can borrow less, so you may need to reduce your budget when looking for a property.
If you have already started with your application, you should inform your lender of your new salary as soon as possible to ensure that they can still offer you a mortgage.
What if my income is dependent on commissions or bonuses?
Each lender assesses affordability individually; it is common for many modern lenders to consider commission and bonus payments. However, you will need to make sure you can provide evidence to the provider of your potential income with bonuses and commission.
Your payslips can prove this if you have been in a job for a few months. If not, a written confirmation of guaranteed bonuses or what commission you can receive may help.
What if I’m self-employed?
Many lenders will provide mortgages to self-employed people. However, as with all mortgages, you will need to be able to prove your income.
Lenders typically need to see your statements and account for at least the past year and sometimes three years or more.
This implies that you may not be able to purchase a house immediately if you have only recently become self-employed.
Should I delay buying a house or moving jobs?
Waiting until you’ve been in the same job for a while will likely increase your chance of being accepted for a mortgage and could even open up better mortgage deals for you.
Waiting until your probation period is over and you have been in the role for more than six months is often enough for most lenders.
If you can’t wait to move house, it may be worth staying in your current job if you can.
What if neither can wait?
It could still be possible if you can’t delay either move, but it will require you to find a lender willing to overlook your career change.
A good option may be to contact a mortgage broker, as they will have a view of the market and access to exclusive deals; they will be able to look at your situation and advise you which mortgage lenders are most likely to accept you.
If you can do so, putting down a larger deposit may also help improve your chances of being accepted.
What if I already have a mortgage?
If you already have a mortgage and are considering taking a job that pays less, it is essential to think about whether you are still going to be able to afford your monthly repayments.
Suppose you are coming to the end of your fixed period, looking to remortgage or switch to a new mortgage deal. It may be worth securing a new deal before changing jobs, as this can make it more challenging to get a new deal.