You’ve got a new job, congratulations! Getting a mortgage with a new job is possible, but some mortgage lenders may consider you a risk. This is based on the possibility that you may not pass your probationary period or could be made redundant. Therefore, meaning you would be unable to afford your mortgage repayments.
For this reason, some people choose to delay their mortgage application if they are due to switch jobs. However, if it is necessary to change jobs and buy a home at the same time, there are solutions for this. This quick and easy guide should help you to understand how your mortgage application could be affected by your career change.
Taking out a mortgage with a new job
Mortgage providers tend to look rather sceptically on those who’ve been in a job for less than a year. Making it harder to borrow if you’ve recently started work with a new employer.
One of the key reasons is that when it comes to enforcing redundancies, companies tend to operate on a last in, first out basis. This simply means, that your position is considered less secure if you’ve spent less time there. This adversely affects your credit rating and so makes you a riskier applicant to lend to.
Find the right lender
If you are planning to move to a new company and don’t want this to derail your plans to get on the property ladder, finding the right lender could help.
Each mortgage lender has unique rules on who they are happy to lend to. Factoring in your age, income and credit record, when deciding whether they will accept you for a mortgage or not.
Some lenders will require you to have spent as much as three years in the same job before offering you a mortgage. Although some will ask for as little as three months and some will be happy to lend right from the start. It all depends on the particular bank or building society. It can also be beneficial to your application if your new job is in a similar sector.
It’s worth noting that if you get a declined mortgage then this could affect your credit report. Therefore, only apply for a mortgage if you are confident that the lender will accept you based on the length of time you have been in your role. We recommend searching around the market before giving up or discuss your options with a mortgage broker.
Getting a mortgage whilst in a probation period
If you’ve started a new job and are on a probation period, taking out a mortgage will be tricky. This is because the lender has no guarantee that your employment will be permanent. Again though, this is not the case with all mortgage providers.
However long you’ve been in a job, we’ll help you get the best mortgage rates possible so that you can move into your new house as soon and as cheaply as possible.
Taking out a mortgage when changing contracts
Changing contracts with the same employer can also present some problems. These may arise when you are asked to provide the lender with multiple payslips to prove your income.
This is more of a logistical issue than anything else though. As long as you can explain your situation to the lender you should be fine. Ideally you should have some form of written proof from your company explaining your position to cover all bases.
What happens if you got a pay increase?
If you’ve recently received a pay rise, you’re likely to want a mortgage with a repayment plan that reflects your increased income. However, as is the case with a general change in contracts, the likelihood is that you won’t have multiple payslips available to demonstrate the consistency of your income to the mortgage provider.
Again, try to provide written evidence from your company explaining that your recent pay rise is permanent. You should then be fine applying for a mortgage with it in mind.
What if your salary goes down?
In the circumstance of you taking a pay cut, you might find that lenders will not lend you as much as they would have been prepared to when you were on a higher salary.
If your new job involves different types of financial incentives like commission, bonuses or any other financial benefits then you should inform your mortgage lender. Whilst some lenders might not count bonuses in your affordability calculations, other lenders will.
Other factors, such as how much deposit you can put down for the property will also be considered when a lender is deciding how much to lend to you. Saving up a bigger deposit will improve your chances of getting accepted.
Want more information about different types of mortgages available to you? Please call 01634 968111 or submit an enquiry here.
