If you are planning to buy a home in the UK, you may be wondering how your employment status affects your chances of getting a mortgage. You may have heard that changing jobs or starting a new job can make it harder to get approved by lenders. But is this true? And if so, why?
The truth is that getting a mortgage with a new job is possible, but it can also be challenging. This is because lenders want to see that you have a stable and reliable income that can cover your monthly repayments. They also want to assess your affordability, which means how much you can borrow based on your income and outgoings.
Criteria For Evaluation
Lenders use different criteria to evaluate your employment situation, such as:
- How long you have been in your current job
- How long you have been in the same line of work
- What type of contract you have (permanent, fixed-term, temporary, etc.)
- What your probationary period is (if any)
- How often do you change jobs or employers?
- How your income is structured (salary, bonus, commission, etc.)
- How your income has changed over time
- What your future prospects are
Depending on these factors, lenders may accept or reject your mortgage application or offer you different terms and rates. Here are some of the common reasons why mortgage applications are rejected of new employment in the UK:
- You have not been in your current job for long enough. Most lenders require you to have been with your employer for at least three months or have several years of employment history
a. Some lenders may accept you if you have a contractual job offer or a formal start date within the next three months
b. but others may decline you or ask for more evidence.
- You are on a probationary period. Your employer retains the ability to terminate your contract abruptly and with minimal explanation during your probationary period. This makes lenders wary of lending to you, as they may see you as a higher risk. Some lenders might approve your application if you’ve completed your probation or possess a letter from your employer confirming your permanent status. However, others might not accept these conditions.
- You have a temporary or fixed-term contract. Lenders may see temporary or fixed-term contracts as less secure than permanent ones. Some lenders may consider you eligible if you hold a lengthy work history within the same field or profession, or if you can provide evidence of an impending contract extension or renewal, while others may not, as contracts often have expiry dates that might not be renewed.
- Frequent changes in your jobs or employers might lead lenders to perceive you as exhibiting instability or unreliability, potentially indicating dissatisfaction with work or challenges in retaining a job. Some lenders may accept you if you have changed jobs for career progression or better pay, or if you have stayed in the same line of work, but others may not.
- You have an irregular or variable income. Lenders may find it harder to assess your affordability if your income fluctuates from month to month or year to year. as they may not be able to predict how much you will earn in the future. This applies to self-employed applicants, as well as those who earn bonuses, commissions, overtime, tips, etc. Some lenders may accept you if you can provide evidence of your income over a longer period (usually two or three years). If you have a guaranteed minimum income, but others may not.
As you can see, getting a mortgage with a new job is not impossible, but it can be tricky. The key is to find a lender that suits your employment circumstances and can offer you a competitive deal. This is where an expert mortgage advisor can help. They can compare different lenders and products for you and advise you on how to prepare and present your application. They can also help you with the paperwork and guide you through the whole process.
If you are looking for a mortgage with a new job in the UK. Contact us today and we will connect you with an expert mortgage advisor who can help you achieve your home buying goals.