Starting a new job could make getting accepted for a mortgage more difficult — even if you'll earn more. Here's why and what you can do about it.
If you want to change jobs but you’re also planning to apply for a mortgage, you’ll need to consider your options carefully.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Yes, it’s possible, but getting a new job will affect your chances of being accepted for a mortgage. This is because most lenders prefer job stability and like to see that you’ve been with your employer for a lengthy period.
Some lenders may accept you if you've worked in your role for at least three months. But some mortgages are only available if you've been in your job for more than three years.
Ultimately, it will depend on the lender's acceptance criteria – rules on who they are happy to give a mortgage to – including your employment status, age, income and credit record.
If you’ve only just started a new job, lenders will view you as higher risk and will be more reluctant to offer you a mortgage. They might be concerned that you would be unable to afford your mortgage payments if you lost your job because of:
A probationary period: Your company could terminate your contract without notice in this period (until your role becomes permanent).
Redundancy: If your employer needs to make cuts, the newest employees are usually the first to go.
Although a new job can hurt your chances of getting a mortgage, a higher salary could lessen the impact. This is because it increases your affordability calculation – you may even be able to borrow more.
You will need to prove your new salary, so ask your employer to confirm it in writing.
Moving to a new job with lower pay means the amount you can afford to put towards mortgage payments will also decrease.
This means the amount you can borrow will go down too, so you may need to look for lower-priced homes if you are still want to buy a property.
If you have already started your mortgage application, let your lender know your new salary to ensure they can still offer you a mortgage.
If you are remortgaging and have seen your salary cut, there is some good news. If you stay with the same lender, they will not generally carry out a second affordability check on you. So as long as you can still make the payments, you should be fine.
However, if you are changing lenders, you will need to submit your current salary to the new provider rather than your old one.
If your new job pays a lower basic salary but includes bonus payments, commission or overtime, try to show lenders how much you could earn.
If you have been in a job a few months, your payslips can prove this. If not, written confirmation of guaranteed bonuses or what commission you can earn may help.
If you work for yourself, you could still get a mortgage, but you need to prove your income.
Lenders usually need to see your statements and accounts for at least the past year and sometimes ask for three years or more.
This means you may not be able to buy a house immediately if you have just become self-employed.
If you can, it could be sensible to wait until you've been in your new job a while before you start house hunting. Your job will look more secure, improving your chances of getting a mortgage.
Waiting until your probation is over and you've been in the role for more than six months is enough for many lenders.
If you need to buy a house sooner, decide if changing your career can wait until after moving in.
There is still a chance you could get a mortgage, but you’ll need to find a lender that’s not put off by your career change.
It’s worth contacting a mortgage broker because they often have access to exclusive deals and know which lenders will most likely accept you.
You could also improve your chances if you can put a large deposit towards the house.
If you already have a mortgage but want to remortgage soon, getting a new job can make it harder to get a new deal.
It may be easier to switch before you change jobs if you can do this without paying any fees.
If your new job has a lower salary, affording your monthly payments can be more difficult. Here is how to write a budget to cut your other costs.
What happens to my mortgage if I lose my job?
Losing your job doesn’t automatically mean losing your mortgage, but it could become an issue if you can’t keep up with your monthly repayments. If you have any concerns about this, speak to your lender as soon as possible.
Your lender will work with you to come to a short-term arrangement, such as a payment holiday, to help you while you get back on your feet and find a new job.