Thursday 29th February 2024
(information contained within was correct at the time of publication but is subject to change)
Life moves fast and sometimes big life events can unfold almost simultaneously. Perhaps two of the biggest factors in our lives as humans are our home and job. The two are so important that it begs the question – what happens if you’re changing jobs while buying a house?
That is what we are going to answer in this article. To do that, we need to understand a few things. Such as how important your job is to a mortgage application, what lenders think about the matter, if changing jobs while buying a house is even possible, and how a mortgage advisor can help.
How Important is Your Job to a Mortgage Application?
Broadly speaking, a person’s job is incredibly important to their mortgage application whether you’re a first-time homebuyer or not. After all, what a mortgage lender ultimately wants to know is whether you can afford the mortgage you’re after.
A job provides an individual with income. This provides your income to enable you to pay your mortgage. If you don’t have an income, a residential mortgage is highly unlikely to be achieved. This is why your job is vital to a mortgage application. However, under some circumstances, lenders can consider income from other sources.
As part of your mortgage application, your current finances are going to be the main topic of discussion. To show your creditworthiness, you’ll need to supply bank statements and pay slips. These documents will show and prove you have a regular income and how well you are managing it.
Can You Get a Mortgage With a New Job?
Yes, it is possible to get a mortgage with a new job, but that isn’t always the case. Most lenders like to see job stability in a mortgage application, and changing jobs – even if it’s for more money or a higher position – still shows job instability.
So changing jobs while buying a house does come with a fair amount of risk on whether or not you will be accepted for a mortgage. Ultimately, the answer to the question is dependent on the lender.
Some lenders will be happy to work from a contract of employment with a future start date. In contrast, other lenders will only consider those who have had a 12-month record of consistent employment. Of course, this is not all a lender will look at when considering your mortgage application. They’ll also want to know your credit score, age, marital status, and more, which all play a part in the mortgage application process.
It’s best to do some research or consult a mortgage broker before changing jobs while buying a house. Look for lenders that meet your requirements in terms of how long you need to have been in employment before submitting a mortgage application.
Why a Lender May Reject your Mortgage Application if You’re Changing Jobs While Buying a House
If you have just started in your new role before attempting to obtain a mortgage, you can be viewed as high-risk by a lender. Simply because if you lose said job, you will most likely not be able to afford your mortgage repayments. This makes you a higher risk to a lender, therefore you may not be able to obtain a mortgage.
The main reason why lenders may be concerned about you changing jobs while buying a house is the probationary period.
Probationary Period
A probationary period is considered standard practice in the UK. Although not a legal requirement, most jobs come with a probationary period.
This is a temporary period – around 3-6 months – where an employer can see if an employee is the right fit for a particular position. This also works both ways and allows the employee to test the waters in their new position.
During a probationary period, a job position may not be permanent and an employer can terminate the contract with much more ease than they could do with a permanently employed position. During this time, lenders will view your employment as uncertain, and so could be reluctant to offer a mortgage.
Is Going From Employed to Self-employed Seen in the Same Way as Changing Jobs While Buying a House?
If you hope to go from full-time employment to being self-employed, this will affect your mortgage application.
The problem for mortgage lenders is that they will have no track record of your self-employment to work with. Plus, you will take on the sole responsibility of your income, which will likely fluctuate if you are just starting out. This means that you will be classed as high-risk to a lender.
However, it is still possible to get a mortgage while self-employed. But the downfall is that you will need to prove your income as a self-employed worker. Most lenders hope to see 2-3 years’ worth of accounts, but there are some instances where just 1 year’s worth of accounts will suffice. There are also circumstances where a mortgage can be obtained for someone who is newly self-employed.
If you are deciding to shift from employed to self-employed, it may be best to put a hold on your mortgage application for a while, so that you can evidence your income and establish your business before finding a type of mortgage that suits your situation best.
Going From Self-Employed to Employed
Going from being a self-employed worker to an employed worker is similar to changing jobs while buying a house (if going from an employed position to another employed position). It’s similar in the sense that it has the possibility of affecting your mortgage application in the same way – in a newly employed position, you’ll still face the probationary period.
But going from self-employed to employed is better for lenders than going the other way around. Having that employment status gives lenders more reassurance that you will most likely earn a stable income and, therefore, will be able to afford your mortgage repayments.
Changing Jobs While Buying a House Success: How to Improve Your Chances of Being Accepted for a Mortgage
If changing jobs while buying a house is a necessary course to take, then there are some ways you can improve your chances of being accepted for a mortgage. Our team of mortgage advisors recommend these steps:
Gather Proof of Employment
Gather documentation relating to your new employment status. Such documents to compile include: a copy of your offer of employment, a copy of your contract, the latest payslips from the new and previous job, and anything else you think would strengthen your employment status.
Pay a Larger Deposit
By paying a larger deposit, you can open yourself up to more mortgage deals and lenders. With a wider selection of lenders to choose from and a bigger upfront payment towards your mortgage, you have more of a chance of finding a lender and deal that suits your circumstances.
Speak to a Mortgage Broker
If you’re changing jobs while buying a house, a great course of action to take is to consult a mortgage broker. A good mortgage broker will get to know you and your current job circumstances and so may be able to save you time and money in your search for a mortgage deal that suits you.
Here at Norcutt Mortgages, we have access to both conventional and specialist lenders, allowing us to find the ideal mortgage for our customers.
If you are planning on changing jobs but also want a mortgage, speak to us to discuss your plans today.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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