Starting a new job could make getting a mortgage harder – even if you will earn more. Here is are the reasons and what you can do regarding this issue.
Why Do Switching Jobs Matter?
Switching to a new job will have an effect on your chances of being accepted for a mortgage since most lenders only offer you a mortgage if you have been in your job 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 pleased to offer a mortgage to – which includes your age, employment status, credit record, and income.
Why Would They Turn You Down?
Lenders think that it is riskier to give you a mortgage after you start a new job. You could become unable to sustain your mortgage payments if lose your job because of:
- Redundancy: When your employer needs to make cuts, the newest employees are normally the first to go.
- A probation period: Your company could end your contract without notice during this period (unless your role becomes permanent).
If You Currently Earn More
Even though a new job can lessen your chances of getting a mortgage, a higher salary can reduce 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.
If You Currently Earn Less
Transferring to a new job with lower pay means that the amount you can afford towards mortgage payments will decrease
This means that you can borrow less, so if you are currently looking for a property, you may need to lessen the price you can pay.
If you have already started with your application, allow your lender to know your new salary and ensure that they can still offer you a mortgage.
If Your Income Is Dependent On Commission Or Bonuses
If your new job gives a lower basic salary but includes commission, bonus payments, or overtime, try to prove to the lenders how much you could earn.
Your payslips can prove this if you have been in a job a few months. If not, a written confirmation of guaranteed bonuses or what commission you can receive may help.
If You Go Self-Employed
If you are working for yourself, you could still obtain a mortgage. However, you will need to be able to prove your income.
Lenders normally 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 just gone self-employed.
Should You Delay Buying A House Or Moving Jobs?
You could wait until you have been in your new job a while before you begin house hunting. Your job will seem more secure, improving your opportunities for a mortgage.
Waiting until your probation period is over and you have been in the role for more than six months is enough for most lenders.
If you want to buy a house sooner, decide if changing career can wait until after you transfer.
What If Neither Can Wait?
There's still a possibility that you could be able to get a mortgage, but you will need to look for a lender that is not put off by your career change.
Contact a mortgage broker since they usually have access to exclusive deals and know which lenders are most likely to accept you.
You could also increase your chances if you can put a large deposit towards the house.
If You Already Have A Mortgage
If you desire to switch to a new mortgage soon, getting a new job can make it more difficult to get a new deal.
It may be easier to change before you transfer jobs if you can do this without any fees.
If your new job has a lower salary, affording your monthly payments can be harder.