If you’ve recently started a new job or are considering taking the leap, you may wonder where that leaves you mortgage-wise. For example, will it affect your ability to be approved for a new mortgage? How long do you need to wait before applying?
Many mortgage lenders will consider you for a mortgage if you have just started a new job, even if you are in a probationary period. Some lenders will require you to have completed a minimum amount of time in your new role and have a stable employment history.
In this blog, we’ll examine the subject in a bit more detail to give you the confidence you need to make important decisions about your career and home-buying journey.
If you are currently in this situation, it’s important to seek help from a mortgage broker who can steer you towards the right mortgage lenders to get the right deal for your circumstances. Contact Goldmanread for friendly, independent mortgage advice today.
Is it a bad idea to take a new job while applying for a mortgage, even if the pay is better?
Contrary to what you may think, it’s not always a bad idea to apply for a mortgage while between jobs. If your new job move involves a pay rise, then this may actually help with the mortgage application in terms of how much you can borrow.
Many lenders consider mortgages based on new job contracts or job offer letters. Generally, these lenders require written confirmation that the job will start within the next three months.
Keep in mind that lenders value job stability, so frequent job changes may raise concerns.
When should I tell the mortgage lender about a new job?
If you currently have a mortgage, you should inform your lender of any change in your financial situation, such as a change in employment, as soon as possible. That includes getting a new job with the same company as well as moving to a new company.
Most mortgage lenders will ask to see a signed contract when you get a new job. In some cases, lenders may settle for a written reference from your new employer to confirm your new position.
How long do I need to be in a job to get a mortgage?
If you approach the right lender when getting a mortgage, there should be no minimum period to be in a new job before making a mortgage application. A few lenders will actually consider you for a mortgage before you start a new job. This is especially true if you take a new job with the same employer or have previous work history in a similar role.
Can a new job position affect mortgage pre-approval?
If you have recently started a new job, you need to choose your mortgage lender carefully. Most lenders will consider you for a mortgage but will ask for proof, such as an employment contract. This is in addition to other standard supporting documents, such as bank statements, which they use to complete an affordability calculation.
It’s important that you inform your mortgage broker of changes to your employment terms so that they can seek the best deal from the most appropriate lenders. This is especially true if the change involves a pay rise, which will open up more options and increase your chances of mortgage approval.
What do mortgage lenders consider when an applicant gets a new job?
There are a number of factors that lenders consider if you are in a new job, as follows:
Employment stability
Job stability and a steady income are important when applying for a mortgage with a new lender. They will look at employment history and how frequently you have changed jobs.
Job contract structure
Lenders’ eligibility criteria depends on the employment terms of new jobs, i.e. the type of contract.
- Permanent contract
If your new job is on a permanent contract, you shouldn’t have any issues getting a mortgage from a variety of mainstream lenders. - Self-employed
If you become self-employed, lenders typically look at 12 months’ proof of income and one year’s tax returns. Only specialist lenders will consider these types of applications, which is why it’s best to use a mortgage broker who deals with self-employed mortgages. - Zero-hours contract
While not impossible, getting a mortgage with a zero-hours contract will certainly be more challenging. Lenders prefer fixed incomes for their calculations. Again, a broker will know which lenders to approach. - Fixed-term contract
If you are on a self-employed, fixed-term contract, then you will be considered in the same way as any other self-employed person (see above). If you are on an employed fixed contract, i.e., your employer or umbrella company deals with your tax and National Insurance, then it may be easier to arrange a new mortgage. However, you may still need to approach a specialist lender to get a mortgage offer. Generally, lenders like proof that contractors have been employed in the same industry for at least a year. - Probationary period
Most lenders will offer mortgages if you are still in a probationary period.
Income and mortgage affordability
When assessing your mortgage options in a new job, lenders will ask for details of your current salary and your new salary. They usually base the affordability calculation on the new salary.
The size of your deposit also affects affordability. Lower deposits of 5-10% will attract restricted multiples. If you have a large deposit (typically over 20%), you may be offered as much as five times your new salary.
It’s very important to consider this if you are taking a pay cut in your new job.
Credit history
Another very important factor when getting a mortgage with a new job is your credit history. While it’s possible to get a mortgage with an adverse credit history, having a new job can make it more challenging. You will certainly be offered less favourable terms in any case, leading to larger monthly mortgage repayments.
If you have a history of poor credit, it’s crucial to seek advice from a specialist broker who can help you find the right mortgage deal for your circumstances. These deals are likely to be found through specialist lenders only.
Self-employment and mortgage eligibility
Getting a mortgage when self-employed
Getting a mortgage as a self-employed individual can be a bit more challenging, but it’s certainly not impossible. This is where a specialist mortgage broker can be invaluable, as they can highlight lenders that are more accommodating to self-employed applicants.
For self-employed mortgages, the primary hurdle is the lack of traditional payslips, so lenders usually ask for other proof of income, like company accounts, tax returns and an accountant’s certificate.
New job contracts and mortgage applications
Can I get a mortgage with a new contract?
Not every lender views a new job contract as higher risk – it is still possible to get a mortgage. A broker can help you find lenders who are more flexible and willing to consider your new employment status.
Some lenders might request a job offer letter from your new employer to confirm your earnings and prove your job stability.
Other lenders may be willing to offer a mortgage without one, but at a higher interest rate to offset the perceived risk. Factors such as the length and type of your contract, your salary, and your credit history will all affect your chances of getting a mortgage offer.
Mortgage options for new job applicants
What mortgage options are available?
If you are changing jobs, you will probably have access to options including fixed-rate, variable-rate, tracker, and offset mortgages. Each type has pros and cons, and your broker can help you determine which option is best suited to your financial circumstances and long-term goals.
New job applicants may also be eligible for government schemes such as Help to Buy or Shared Ownership. These programs can make it easier to get on the property ladder, even if you’re still in the early stages of your new job.
Your income, employment history, credit history, and the size of your deposit will affect your mortgage application. A specialist broker can help you navigate these factors and improve your chances of getting accepted for a mortgage.
Are you a working professional looking for a mortgage? Get in touch with us
At Goldmanread, we have been helping clients get competitive mortgages since 2009. We have access to hundreds of lenders across the mortgage market, offering thousands of mortgage products
If you are about to change jobs, or have recently started a new job, we will work hard to present you with the best mortgage deals, and help you through every stage of the application process.
Contact us today to get started.
