Getting a Mortgage After Changing Jobs: Is It Possible?

Posted by Jamie Mackenzie Smith in Mortgages on 9 April 2019

These days it’s estimated the average person in the UK will change jobs twelve times during their working life, so it’s perfectly plausible that during at least one of those switches might involve moving house at the same time.

But timing is a key component when applying for any mortgage and you may have heard it’s often not the best idea to switch jobs immediately before or during the application process. There are however plenty of occasions when it’s unavoidable, and if it happens it’s important you understand how likely it is to affect your application in the eyes of lenders.

These are some of the most common scenarios:

1. You apply for a mortgage shortly after starting a new job

Say for example you’ve just switched jobs and were planning on moving house at some point in the future, but for whatever reason (maybe you see the perfect house come onto the market sooner than expected, or the commute from your new job is unreasonable), your hand is forced and you need to move sooner than you’d hoped.

In an ideal world, you would need to wait at least a few months after changing jobs before applying for a mortgage to improve your chances of being accepted. That’s because some lenders might be nervous about offering to lend money to someone that has just started a new position; the longer you’ve been at your current job, the more stable you appear to lenders – and lenders love stability.

Any time less than a year in your current role could cause potential issues - possibly because you might need to pass a probation period, or that as a new employee, you could be more vulnerable to events such as redundancy.

Mortgage providers are also likely to ask to see at least three months’ worth of payslips (some will want to see more) as proof of income during the mortgage application process. This could be particularly tricky if part of your income is based on bonuses or overtime. It may be possible to get a letter from your employer stating your salary, but at the very least, this could delay your application.

Each lender will have its own policy on this, which could mean that your choice of providers is limited should you not fit the criteria of some.

2. You Change jobs between an Agreement in Principle and a formal mortgage application

Changing jobs between receiving an Agreement in Principle and completing a formal mortgage application might not be the best idea either: you may find that the lender isn’t prepared to offer the same terms if your situation has changed significantly.

That’s because the lender will have made the offer based on your circumstances at the time of application – if those change then the terms of the agreement may no longer be a fair representation of your ability to borrow and repay a mortgage. As well as the issues around the amount of time in your new job, and change in salary could also see the offer adjusted.

Agreements in Principle aren’t a promise or legally-binding commitment to lend, but instead are in indication of what the lender might be willing to loan based on your current circumstances, and if those change all bets are off. In fact, changing job isn’t the only reason why you might be granted a Decision in Principle and then declined for the actual mortgage.

This isn’t to say that you won’t be able to get a mortgage if you’ve just taken on a new role. If your salary has increased, this could be enough to lessen other concerns the lender might have, but it will require full reassessment of your financial position.

3. Changing jobs after receiving a mortgage offer

If you switch jobs in the time between receiving your formal mortgage offer and completing on your purchase, it can obviously be a worrying time. Provided your Affordability isn’t reduced as a result of the change of job, many lenders will allow you to continue with the offer as it stands, but if the change is significant – such as a big drop in salary, a non-permanent contract or fundamental change in how you are paid, (moving from salary to bonus-based earnings for example) the offer could still be withdrawn at this late stage.

Even if the mortgage offer isn’t withdrawn, if your salary drops a lender may well reduce the amount it is prepared to lend based on a re-evaluated affordability check. New, stricter guidelines on affordability were introduced in the aftermath of the 2008 banking crisis and lenders have a responsibility to ensure that any mortgage offer meets this criteria, regardless of when a change in circumstance happens prior to draw-down.

If using a mortgage broker, it’s recommended to consult with them about the likely affect switching jobs would have on your application, as they are more likely to be able to tell you how individual lenders have responded in the past.

What if I don’t inform the lender of my job change?

Once your mortgage offer is received and your purchase is proceeding, you are legally required to inform your mortgage lender of any material changes that are likely to have an impact on your affordability.

Checks to ensure nothing that would affect the mortgage lender’s decision may be carried out at different points during your application, such as the bankruptcy check that often takes place just before completion.

Failure to disclose this information when asked doesn’t mean that the lender won’t find out and it is much better to be up-front about a change in circumstances, rather than trying to hide it.

4. You switch to a job with a different type of salary

Even if you’ve timed your career change carefully so that it takes place well in advance of any house move and you’ve fulfilled the lender’s stability requirements, you could still face difficulties proving your income if the way you are paid is a big departure from how you’ve been paid in the past.

If you switch from a job with a fixed salary to one that relies largely on commission, lenders might worry that your income is less stable and therefore may not take all of it into account when it comes to calculating your affordability.

Each lender will have its own policy on how much non-salaried income will be taken into account, but as a rule, even with 2 years of supporting evidence many lenders may only factor in 50% of any bonus or commission element of your income.

Anyone that is self-employed or takes income via dividends rather than a salary may also find extra barriers when it comes to making a mortgage application.

What else is factored into a mortgage application?

After what may be years of saving for a deposit, spending countless hours trawling property websites and working hard to ensure you meet affordability requirements, the idea of having to wait a while longer before applying for a mortgage could seem like a hard pill to swallow.

But while the timing of a change in employment can have a significant influence on the outcome of a mortgage application, it is just one factor among many.

Your Creditworthiness (how likely you are to meet repayments, based largely on how you’ve managed credit agreements in the past) also plays a key role, with the information found on your Credit Report being the key component in how lenders will assess it.

You can see how a typical lender is likely to judge you when they check your Credit Report by trying checkmyfile FREE for 30 days, then for just £14.99 a month after, which you can cancel online, by phone or by email. You’ll see data from all four UK Credit Reference Agencies together, and get expert support and advice from our team of professional Credit Analysts should you need it.

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