Your home may be repossessed if you do not keep up repayments on your mortgage. When The Bank Says No is a mortgage broker, and not a lender.
Securing a mortgage is one of the most crucial aspects of any property purchase. However, it can also be one of the most stressful processes—especially if you’ve just changed your job.
Shifting from one job to another can be a nerve-wracking experience in and of it. But when you add in the fact that a mortgage depends on it, well, that can be just terrifying!
So, today, we are here to tell you that there’s nothing to worry about! While changing jobs can affect mortgages, it is still possible to get a mortgage with a new job, despite what you might think.
How May Switching Jobs Affect My Mortgage Approval?
Before we get into the nitty-gritty details, let’s first explain how mortgages work. Essentially, you’re borrowing money from a lender to purchase property — whether a home or otherwise.
The loan is secured by the property itself. This means that if you fail to pay the money over the designated years, the lender has the right to take the property back.
There are many mortgage providers out there, all of whom share one thing: they want to ensure you can repay the loan and meet the monthly repayments.
Of course, this is where the job change comes into play. There are many reasons why it can be an issue, including the following:
- Employment stability: Most, if not all, lenders prefer a client with a stable job history, as that means they have a consistent income stream.
- Income stability: Frequently moving from one job to another can give the illusion of an unreliable income, which may turn lenders away.
- Unpredictable future: If the change was more of a career shift than a job one, then lenders may think it’s too risky to loan you anything.
Fortunately, despite these issues, it is still possible for you to get a mortgage despite a change of jobs, with the help of a specialist mortgage broker like When the Bank Says No.
How to Secure a Mortgage With a New Job? Part 1
By now, you’re probably wondering how you can still get the mortgage with all the previous barriers. The solution is to follow the tips outlined below:
Time Your Job Change
Though this may be a little late, applying for your mortgage before moving into the new job will make it easier to get approved. But how will this make a difference, you wonder?
For one, even though you’ll be shifting to another job later on, sticking in one place for long shows two things. One, it states that you’re a reliable worker and that you can hold a job for a long while.
Two, it shows a stable financial and work history. As we mentioned, lenders care about this factor above all else. So as long as you establish a good record, it means you can probably be a stable borrower.
Search Around for Lenders
If you can’t time your job change with the mortgage application, your next step would be to look around for lenders.
The new job can make finding a mortgage lender that suits you challenging, but it won’t make it impossible.
All you need to do is:
- Go through traditional popular lenders, like banks, credit unions, and online lenders in your area, until you’ve gone through them all.
- Seek recommendations from friends, family members, or even colleagues. They may be able to help you out with a connection or their personal knowledge.
- Explore specialist lenders or mortgage brokers as they cater to borrowers with exceptional circumstances.
Going through all this research can be exhausting, but it’s worth it. Every lender has their own set of criteria, which means there’s one out there for you! Better still, save yourself all the legwork and worry and leave it to When the Bank Says No to do the task of finding you a mortgage when you've changed job.
Maximise your chance of approval with specialist advice from an expert in Mortgage With a New Job
How to Secure a Mortgage With a New Job? Part 2
Provide All Necessary Documentation
Once you’ve found your perfect lender, it’s time to submit all the necessary papers. The primary issue with this step is that missing any document can mean your application will be rejected.
However, there are a few primary documents that you’ll always need to provide, including:
- Letter of employment (signed and dated)
- Offer letter from your new job
- At least three months of bank statements
- Details of any outstanding debts
- Proof of income and tax returns
Of course, the required papers differ from individual to individual, so make sure to contact the lender for more information. When the Bank Says No will ensure all your paperwork is in order before any mortgage application is made, boosting your chances of a mortgage approval.
Build a Strong Credit Score
Again, what did we say lenders care about? They care about consistency in your financial life! What’s more telling about your economic status than your credit score and debt-to-income ratio?
Those two elements have a significant impact on whether or not you’ll get approved for the loan. That’s because while your new job is a vague indication of your future financial situation, your credit score and DTI are concrete signs of your financial status!
So, to create a strong credit score, make sure you pay all your bills on time. No delays and no missed payments, so you can avoid hurting your credit score.
Another thing you can do is keep your credit utilisation low rate—this is the available credit you’re using. Lastly, when it comes to the DTI ratio, it’ll help if your next job offers better pay or if you can settle some of your existing debts.
Be Transparent
Last, but definitely not least, you must be very sincere with your mortgage lender to secure your loan. This means you’ll need to provide accurate information about your past income, future income, debts, and assets.
Disclose with your lender why you are going through this job change, why the new job is better, and your plans for the future.
Respond promptly to any information requests and keep communication channels open. This way, you’ll make it easier for your lender to understand the situation and improve your chances of getting approved.
Why Would a Lender Reject Me?
Lenders can reject applicants for various reasons, often because the client is deemed too risky. Some of these reasons include the next:
- Insufficient Income
Having an insufficient income is one of the first reasons why lenders would reject you. In general, applicants can borrow around four times their annual income.
This means if you get paid around £50,000, then your maximum mortgage could be £200,000. So, if you’re applying for anything bigger than that, there’s a big chance it’ll get rejected.
- Poor Credit History
Bankruptcies, missed payments, and delayed payments, are all major red flags for all lenders out there. They show on your credit history and make it difficult for you to get approved for anything.
After all, if you can’t handle your financial responsibilities, how can you handle paying a mortgage?
- High Debt-To-Income Ratio
Sadly, even if you have a good credit score and a good income that can cover your mortgage, there’s a chance you’ll get rejected because of your DTI.
Basically, your DTI ratio is the percentage of income that you pay for your debts and obligations. If the percentage is higher than 40%, you’re liable for rejection.
- Employment Instability
Employment instability doesn’t just mean moving from one job to another. This segment includes frequent job changes, significant gaps in employment history, and unstable income.
These are all signs that your employment status is uncertain and you’re a risky applicant and might not be able to pay the loan.
- Inadequate Deposit
A deposit is essentially a sum of money that reflects your commitment to the loan. It’s the lender’s collateral in case anything goes wrong.
Placing an inadequate deposit could label you as a risky borrower, hurting your chances of getting the loan.
- Discrepancies in the Application
Of all the reasons on this list, this one is the easiest to handle! Loaners primarily look for stable, reliable individuals that can pay off their debts in due time.
But if there’s something wrong with your application, like an address or a contact number that doesn’t match, it’ll raise questions. Worse, the lender can simply choose to reject your application.
So, please keep an eye out for any mistakes in your applications, or better still leave it to us to ensure your mortgage application is all in order before it is submitted .
- You’ve Reached the Age Limit
Mostly, mortgage lenders want their clients to pay off their debts by the time they’re around their 60s or 70s.
So, for example, if you’re applying for a mortgage that’ll take 35 years to pay off and you’re already in your 40s, there’s a chance you won’t get approved.
Mortgage With a New Job - FAQs
Mortgage With a New Job Calculator
Mortgage approval with a new job is possible.
When the Bank Says No has helped landlords all over the UK purchase their Buy to Let property with a 20% deposit. Whether you're a first-time landlord with limited funds, or an experienced property investor looking to reserve cash for other purposes, we can help.
Our friendly team will talk through your situation and scour the market for the most suitable mortgage products for your needs. From combing through terms and comparing mortgage rates to ensure you're getting the right deal, to helping you fine-tune your application, we'll be there every step of the way.
Achieving your Buy to Let.
So, are you feeling confident about getting a mortgage with a new job now? We sure hope so! There’s almost no reason why you shouldn’t qualify for a mortgage if you change jobs.
The primary red flags lenders look for are your credit score, DTI ratio, and income history. Yet, as long as you have everything in order, you should be able to get a mortgage without a problem, especially if you leave it to When The Bank Says No to deal with your mortgage application on your behalf.
