Been offered a new job? Congratulations! Lying awake at night wondering whether you can get a mortgage now? We’re here to put you out of your misery.
Whether you’re umming and ah-ing about whether to accept that job offer, or you’re toying with the idea of starting your job hunt, we’ll take a look at the ins and outs of getting a mortgage with a new job.
In short, it’s not as scary as you might think and you do have options. We’ll break it all down for you below.
Why do mortgage lenders care if you have a new job?
If you were lending someone money, you’d want to be sure they were going to be able to pay it back, right?
Mortgage lenders are exactly the same. They don’t want to give anyone a mortgage who’s not going to be able to pay the loan back. So, when you put in a mortgage application, they’ll spend a long time trying to work out what their chances are of getting their loan repaid. Makes sense, right?
But where does a new job come into this?
Well, if you’ve recently changed jobs, a mortgage lender will see you as more risky than someone who’s been in the same job for ages. Why? It mostly comes down to 3 things:
1. You might get made redundant
Don’t worry, we’re not trying to scare you! It’s just that if a company has to make job cuts, often they’ll let go of the newest employees first. You know, ‘last one in, first one out’ and all that! This means you’re more likely to be made redundant than someone who’s been in the same job for years.
2. You might still be on your probation period
Are you still on your probation period? We hate to break it to you if you are, but this means your employer could end your contract at any moment, with barely any notice. If that happens, how are you going to pay your mortgage?
Just as that’s probably a terrifying thought for you, it’s also pretty scary for those mortgage lenders who are desperate not to lose their money. In a nutshell, you’re both in the same boat… kind of…
3. It’ll be hard to prove your income
As part of the application process, lots of lenders will want you to provide them with payslips from the last few months (or longer!). If you haven’t been in your job for that long, that’s going to be just a little bit tricky.
Don’t worry though, some lenders will accept a letter from your employer confirming your salary instead, so all is not lost – we’ll get to this later.
How long do you have to be in a job to get a mortgage?
So, the big question on everyone’s brain: ‘How long do you need to be employed to get a mortgage really??’
Let’s start with the short answer. In the UK, most mortgage lenders will want to see that you’ve been in your current job for at least 3 months.
Now for the long answer. In reality, every mortgage lender is different. Some lenders will be happy to lend to you if you’ve been in your job for 3 months or less, while others will only lend to people who’ve been in employment for more than 3 years!
It’s definitely going to be harder to get a mortgage if you’ve recently changed jobs, so if you can wait a while before applying, that’s ideal. That said, getting a mortgage with a new job is certainly not impossible. At the end of the day, it’s all about finding a lender whose criteria matches your situation.
We’d always recommend getting an independent mortgage broker onboard, who’ll be able to tell you what your options are and which lenders are most likely to accept you. On top of that, they’ll sort out the application for you and make the whole process of getting a mortgage way easier! If you’re not sure where to start, here's where to find the right mortgage broker for you.
Will I be able to get a mortgage with a new job?
If you’ve just changed jobs and you’re holding out for a mortgage, we’re here to help. Here are some of the things that mortgage lenders will look at when they’re deciding whether or not to say ‘yes.’
Have you passed your probation period? Crack open the champagne!
Although you’re still more risky to mortgage lenders than someone who’s been in their job for years and years, at least your employer can’t fire you at a moment’s notice. That definitely counts for something!
If you’re still on your probation period, you might be best off waiting for the green light from your employer before you apply for a mortgage. But if that’s not possible, don’t panic. It’s not the only thing that lenders will look at, as you’ll see below.
It’s not just your other half who’ll be celebrating if you’ve got yourself a pay rise. Your mortgage lender will also have a field day!
One thing that mortgage lenders always look at when they’re deciding whether or not to accept someone for a mortgage is ‘affordability.’ In other words, they’ll try to work out whether they think you’ll be able to afford the monthly repayments. If you’ve got a pay rise, that means you’re more likely to be able to pay them back (cue your mortgage lender breathing a sigh of relief).
If, on the other hand, you’ve taken a pay cut, your ‘affordability’ and the amount your lender will be happy to offer you, will go down. This might mean you need to look for a cheaper house, or if you’re already partway through the house buying process, you’ll need to check that your lender is still happy to offer you the same amount.
When it comes to proving your income, most lenders will want to see at least a few months’ payslips. So if you can, wait until you’ve been in your job for at least a few months before applying. If not, don’t panic. Some lenders will accept a letter from your employer confirming your salary.
Are you still getting paid in the same way as you were before? If you’ve taken a salary cut but your new job includes commission, overtime or bonus payments, your total income may not be so different after all. So, you’ll need to try and show mortgage lenders how much you could really earn.
If you’ve been in your job for a few months, your payslips should do the talking for you. But if not, try to think of how else you could prove your extra income. Perhaps you could get written confirmation of guaranteed bonuses or a letter detailing what commission you can earn. It might just make all the difference!
Your affordability isn’t just about how much you earn. It’s also about how much you spend! Obviously there’s no point in earning tons of money if you spend it all on the latest gadgets or trendy footwear (at least, from your mortgage lender’s point of view!).
Your lender will want to check that your outgoings (such as your living expenses) still leave enough money to pay back your mortgage. Some lenders will even ask for bank statements so that they can check your expenses for themselves. So, make sure you reduce your spending – especially if you’ve taken a pay cut. That means no big purchases until your house sale has gone through (including that fancy car you had your eye on!).
Have you got a car on finance? A student loan? Credit card debts? These factors are all things that your lender will take into account when they’re deciding whether or not to lend to you.
Normally, they’ll do this by checking your credit score – a figure that shows lenders your credit history (or in other words, a figure that shows how good you are at paying debts back).
If you want to see what your credit history looks like, head over to Experian, Equifax and TransUnion. These three organisations provide the information that’s used to calculate your credit score in something called a ‘credit report.’ They have to give you access to it for free by law.
Sadly, if your credit score is not in good shape, it’s unlikely that lenders will offer you a mortgage. Especially if you have a new job on top of it all! So, if your credit report’s looking a bit peaky, now’s the time to spruce it up a bit.
That means settling any unpaid bills, paying off your credit cards and avoiding any big purchases until you’ve been accepted for a mortgage and it’s all gone through. And yes, that means putting off that fancy holiday you’ve been dreaming of too. Sorry!
Is your new job in the same industry or field as your last one? If your answer’s yes, you’ll have made potential lenders very happy. Basically, if your new job is in a sector or role that you’re experienced in, chances are you’ll be good at it. From a mortgage lender’s standpoint, that means you’re less likely to get fired and more likely to pass your probation period. Get in!
If you’ve launched yourself into a completely new field, don’t panic – lenders will be looking at all the factors we’ve mentioned so far. Plus, every mortgage lender’s criteria is different. Don’t forget to get in touch with a mortgage broker to find out if there are lenders out there that can work with your circumstances. Ultimately, there are over 100 in the UK, including tons of niche and specialist lenders. So, there’s always hope!
Can I get a mortgage if I’ve just turned self-employed?
If you’re self-employed, it’s going to be that little bit more tricky to get a mortgage because you’re unlikely to have payslips that prove your monthly salary. Many lenders need at least one year’s worth of accounts as proof of income before they’ll consider self-employed workers, while others need three years of accounts or even more!
Now add to that the fact that you’ve only just gone self-employed. Is it going to make it trickier to get a mortgage? Absolutely. Is it going to make things impossible? No!
The best thing you can do is talk to a mortgage broker to find out what your options are. They may be able to find you a deal with a lender who has more flexible lending criteria, such as one that specialises in lending to the self-employed.
Everything we’ve mentioned above (like your credit score, your salary and whether you have experience working in the same industry) will also come into play if you’re self-employed. So, performing well in those areas can only help. Plus, if you’re a self-employed fixed-term contract worker, lenders may also look at how long your contracts are. Check out our guide to getting a mortgage on a fixed-term contract to find out more.
Can you get a new job while buying a house?
If you can wait until you’ve been in your new job for a few months before you start house hunting, or if you can change careers after moving into your new home, your life’s going to be a hell of a lot easier. But we all know that’s not always how life works!
So, what happens if you switch jobs while buying a house??
Let’s look at the worst-case scenarios first. If you switch jobs after getting a mortgage in principle, your lender might not be willing to honour the agreement when you come to take out the mortgage. A mortgage in principle is basically a document that says how much a lender is willing to loan you, providing their checks go through okay – it’s based on your circumstances at the time, so if those circumstances change, that might invalidate the offer.
Similarly, if you change jobs once you’ve been accepted for a mortgage, your lender could withdraw their agreement completely, or they could decide to offer you a smaller loan.
Now for the better news: some mortgage providers might just be happy to just continue as if nothing’s changed. It’s as simple as that!
The decision is likely to come down to factors like whether your affordability will stay the same, whether you’ve stayed in the same industry and whether you’ve moved up or down a rung in your career.
Talk to your mortgage broker before accepting a new job offer if you’re in the middle of a house purchase. They’ll be able to advise you on what to do next, and they may even be able to give you the inside scoop on how your lender has reacted to similar situations in the past.
Can I quit my job after getting a mortgage?
Until your house purchase has gone through, you have to tell your lender if you’ve changed jobs. But once you’ve moved in and your mortgage is up and running, you don’t have to keep them updated anymore.
That means no sniffing through your bank statements, no snooping at your payslips and no questions asked if you go ahead and switch jobs. Freedom!
BUT (yes, there’s always a but!): if changing jobs means you’re going to struggle to make your monthly repayments, that’s a different question. Missing mortgage payments can make it really hard to get another mortgage or other loans in the future, so you’re best off being upfront with your provider to see if there’s anything they can do to help.
The other thing to bear in mind is remortgaging. Let’s start at the beginning: If you’re on a fixed-rate mortgage, that means the interest you pay on your loan is fixed at a certain rate (usually for 2 or 5 years). Once that time passes, you’ll want to remortgage your property to stop the interest rates from increasing (our piece on what happens when your fixed-rate mortgage ends has the full lowdown).
The reason we bring this up is that switching jobs when you’re coming close to remortgaging can make it harder to get a good deal on your remortgage – just like how it can make it hard to get a mortgage in the first place. Especially if your salary goes down! So, keep an eye out for the end of your fixed-rate mortgage and bear that in mind if you’re planning a job move anytime soon.
Still eyeing up that job ad you saw posted online?
At the end of the day, nothing’s impossible. Yes, getting a mortgage is easier if you’ve been in your job for at least a few months, but there are other routes you can take. Chat with a mortgage broker before you go any further, to see what they say about your specific circumstances.
Fingers crossed, you’ll be unpacking boxes in your dream home before you know it!