While it may be challenging, getting a mortgage while starting a new job is not entirely out of reach. Having a new job may give you additional things to keep in mind such as probationary periods and income stability, but you can still get approved for a mortgage.
11.2% of homeowners are in the 25-34 age bracket, and 15.4% are between 35 and 44 years of age. These are the ages at which people are more likely to start a new job.
By taking certain steps, you can enhance your chances of mortgage approval even if you have just started working at a new company, or in a new career path entirely. In this article we will detail how to obtain a mortgage while starting a new job.
What Do Lenders Consider When Assessing Mortgage Applications From Workers With New Jobs?
Lenders primarily consider your income stability and ability to meet mortgage repayments. When you have recently started a new job, lenders may also evaluate these additional factors:
Probationary Period
If you are still within your probationary period, lenders may view your employment as less stable. Some lenders have specific policies that require applicants to have completed their probation before granting a mortgage.
Employment History
Lenders often prefer applicants with a stable employment history. If you have recently changed jobs within the same industry or have a strong employment track record, lenders may be more lenient.
Contract Type
The type of contract you have, such as permanent, fixed-term, or self-employment, can impact your mortgage eligibility. Lenders usually prefer permanent contracts over fixed-term or temporary contracts.
How Can I Improve My Chances of Getting a Mortgage With a New Job?
While getting a mortgage with a new job can be more challenging, there are steps you can take to enhance your chances:
Consider Joint Applications
Applying for a mortgage with a co-applicant who has a longer employment history or higher income can increase your chances of approval.
Build a Strong Credit Profile
A higher credit score improves your overall mortgage application. Maintain a good credit score by paying bills on time, reducing outstanding debts, and avoiding excessive credit applications.
Save Up for a Larger Deposit
A higher deposit reduces the loan-to-value ratio and demonstrates financial stability to lenders. A high deposit means banks are taking less of a risk by lending to you. This means you will have an increased amount of mortgage options to choose from.
Contact a Broker
Consult with a mortgage broker who can guide you through the process, such as a member of our team at Deedle. We can assess your circumstances and recommend lenders who are more likely to consider applicants with new jobs, all without charge.
Will I Be Limited in the Amount I Can Borrow if I Have a New Job?
It is possible that having a new job may affect the amount you can borrow. Lenders assess the affordability of a mortgage based on your income, expenses, and other financial commitments. With a new job, lenders may be cautious and lend a smaller amount to mitigate the perceived risk.
How Long Should I Wait In My New Job Before Applying for a Mortgage?
Waiting for at least three to six months in your new job before applying for a mortgage can increase your chances of approval. Having a longer tenure in your new job can improve your mortgage prospects, but there is no specific waiting period that applies universally.
Can I Use Income From My Previous Job to Qualify for a Mortgage?
Perhaps In some cases, lenders may consider income from your previous job if there is a seamless transition between your old and new employment, such as moving to a similar role within the same industry.
However, the policies regarding the use of previous job income can vary among lenders. They may require additional documentation, such as a contract or reference letter, to validate your income continuity.
Will the Interest Rate on My Mortgage Be Higher if I Have a New Job?
No, not usually. The interest rate you receive on your mortgage is primarily based on your creditworthiness, the loan-to-value ratio, and the prevailing market conditions. Having a new job alone may not directly affect the interest rate.
However, if the lender views your new job as less stable, they may factor in additional risk and adjust the interest rate accordingly. This highlights the importance of maintaining a strong credit profile and seeking competitive offers from different lenders.
Can I Get a Mortgage if I Am Starting My Own Business?
Yes, it is possible to get a mortgage if you are starting your own business. However, the requirements and documentation needed for self-employed individuals can be more extensive.
Lenders typically consider your self-employed income based on the average of your earnings over a specified period, usually two to three years, for which you need to provide tax returns, financial statements, and other evidence of your business income. This can be difficult when starting your own business, so you may need to wait until your business is stable.
Will Changing Jobs Affect My Mortgage Approval?
Potentially, yes. If you change jobs before or during the mortgage application process, it can raise concerns about income consistency and stability. However, if you move to a similar or better-paying job within the same industry, it may not have such a negative impact on your mortgage application.
Can I Get a Mortgage if I Have Gaps in My Employment History?
No, not as a rule. Having gaps in your employment history, especially if they are prolonged, may raise concerns for lenders.
They may question the stability of your income and ability to make mortgage payments. However, lenders understand that gaps in employment can happen for various reasons, such as career transitions, personal circumstances or further education. If you are worried, provide a detailed explanation for the gaps and demonstrate that you have a stable income now.
