When you apply for a mortgage there are probably nuggets of advice you’ve heard time and time again to make sure you increase your chances of getting accepted; like using a credit card to build up a credit history if you haven’t borrowed much in the past, or getting an agreement in principle to give you an idea of how much you’re likely to be able to borrow.

But while it might seem like a minor factor, a poorly timed change of job can also potentially affect your chances of getting accepted, so if it’s something you’re thinking of doing, make sure you know what lenders are likely to base their decision on first.

How does changing jobs affect a mortgage application?

In the past we’ve talked about how your stability is factored into a lender’s decision about whether they choose to grant credit. A few aspects involving your job are included in this, such as your role, salary (and crucially) how long you’ve been there.

In essence: the longer you’ve been in a job, the more favourably this is likely to be seen by lenders and conversely, the less time you’ve been in your current job, the less likely lenders are to deem you a stable borrower. It really is nothing personal; it’s just one of the many factors that most mortgage lenders take into consideration during mortgage applications.

It’s also worth remembering that each lender is likely to take a different view of how important your employment status is to the outcome of your application, so while some lenders might not consider you if you’ve recently started a new job, others might.

If you are working with a mortgage broker, make sure they are well-aware of your situation early on so they can recommend lenders that might be more likely to suit your circumstances.

The importance of how you’re paid and the type of employment

For some lenders, the outcome may rely to an extent on the type of job that you're starting and how you’ll be paid, because ultimately their greatest concern is whether you’ll make their payments on time.

The type of job

If you’ve spent the last 10 years working in a specific field and your new role shows your desire and commitment to stay in this line of work, some lenders will take this as a sign that it’s intended to be a long-term career move and as such that your stability might not be called into question by some lenders.

If, however, you’ve trained and worked in a specific field for a long period and recently switched to a job that involves an entirely different skillset or is in a different niche, it’s reasonable to expect that it might just be a steppingstone before finding a more suitable job in your specialised area, and as such there might be a disruption to your cashflow.

For some careers (such as contractors) it might be the nature of the business that you end up moving between jobs fairly regularly. If this is the case you might find certain professional mortgage lenders are more in-tune with your line of work and your requirements.

You might also find if you’ve just moved from self-employed status to a full-time role, you’re likely to have more luck than if you’ve just gone from full time to self-employed. Anything that shows mortgage lenders you’re more likely to have a guaranteed, set income is likely to be viewed as an advantage.

How you’re paid

If you’ve just changed to a job that relies largely on commission, many lenders will see this as a less stable job than one that offers a fixed salary, even if you stand to make a higher salary than you would with a fixed amount. Until you’ve built up a good history of pay slips that show off exactly how much you are realistically likely to earn over the course of a year you may struggle to convince them otherwise.

Some jobs are paid on a commission basis and most mortgage lenders won’t have an issue with the type of pay alone provided you can prove how much you typically bring home every month. If you’ve not worked on a commission basis before and are thinking of taking out a mortgage, you might have a better chance of getting accepted if you wait for several months to a year before applying.

Similarly, if your income includes bonuses and overtime payments, these might not be factored into your Affordability unless you have enough evidence showing these. If these are paid at set points during the year and not every month, you may need to be able to show two years’ worth of pay slips for these to be taken into account for lenders to be able to determine some level of consistency.

Your contract

If you’re on a fixed term contract or still serving a probation period, you might not have as much luck with lenders as you might if you are on a rolling contract with a notice period. That’s because if there’s anything that indicates your employment is likely to end after a certain point or you could be let go without much notice, it immediately draws into question whether mortgage payments are likely to be disrupted as a result of this.

If you’ve recently started a job, lenders may ask employers to see a copy of the contract to make sure that the role is unquestionably yours, that you will earn as much as you’ve claimed and that you’re not only there temporarily.

Timing when you switch

The timing of your change in jobs makes a heap of difference and could well play a part in the outcome of your application. Even though the job and the salary themselves are also hugely important considerations, most would agree that the longer you’ve been at your job before applying for a mortgage, the better.

Changing jobs before an application

There are plenty of reasons why you might think about taking out a mortgage shortly after a job change, such as a salary increase that means you can start thinking about an upgrade or you might be considering somewhere that makes the commute more manageable. But it might be best to hold-off on applying for mortgages for a little while if it means it saves you approaching a lender with little proof of a steady income.

Some lenders will require at least three months’ worth of wage slips, while others may ask for two years’ worth, which means if you’ve recently had a raise or promotion, it could be worth waiting a couple of extra months before thinking about applying for a mortgage, otherwise your new & higher salary might not be fully considered, which could also reduce the amount the lender is willing to let you borrow.

There may well still be lenders willing to lend to you if you’ve just changed jobs, but you might find that you’re limited in the number of lenders to choose from, which means you might be missing out on some of the best deals.

Switching jobs while applying

Changing jobs while you’re in the process of applying isn’t ideal, partly because at this point the lender can back out of the agreement before anything has been signed, so they can avoid any risk they deem to be present.

If you’ve been given an Agreement in Principle and have since changed jobs, then you might find that the Agreement won’t be honoured when you come to take out the mortgage. That’s because the lender will have provisionally agreed to loan to you based on your circumstances at the time of application. 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: some lenders will pay extra attention to how much the salary has increased or how likely they deem you are going to stay in your new job. For that reason, some employers might want to find more details from your new employer about the length of the contract.

Switching jobs once you’ve been accepted

This gets more convoluted if you switch jobs after getting accepted for a mortgage. Some lenders will allow you to continue as though nothing happened provided your affordability isn’t reduced, while others may want to withdraw the credit agreement entirely.

This is one of the situations where the type of role you have taken on might become more important, and if you’ve been seen to make a lateral or upwards move in your career, this is likely to be reflected more positively than if you have started out in an entirely new venture. In this situation, some lenders might assess a move within the same industry by looking at your past employment history and treating it as a like-for-like move.

If you’re moving to a job that appears to pay less than your current position, this is likely to cause your affordability to change, which means the amount you’re likely to be able to repay monthly may decrease.

If using a mortgage broker, it is recommended to consult with them about the effect 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 you have started the application for a mortgage (not counting the Agreement in Principle stage), 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 they’re far more likely to take the job change favourably if you let them know ahead of this happening.

What else is factored into a mortgage application?

There are so many aspects to a mortgage application, with many factors considered, so while the timing of a job change at a pivotal moment in the process can have an influence on the outcome, it isn’t the only thing with the ability to do so.

Your creditworthiness (your history of making repayments on time and thus likelihood of doing so again in the future) also plays a key role, with the information found on your Credit Report making up a large amount of what lenders will assess to determine this.

You can see what lenders assess 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.

Updated by Sam Griffin on 16 September 2021