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Will a new job affect my mortgage?
So, you’ve been job-hunting and had good news from your last interview: you got the job! But, what if you’re also halfway through applying for a new mortgage?
If this sounds familiar, you might want to consider delaying that job offer if you can.
Passing probation is your priority
Due to the mortgage lending rules being tightened in 2014, lenders want to be happy that you’re in a stable financial situation before you borrow from them. This is why they may prefer to see that you have at least passed your probation period after starting a new job. Depending on where you work, this could be anywhere from around three to six months.
When you’re in your probation period, your employer doesn’t have to give you a lot of notice if they decide to end your contract. They may decide you’re not right for the job, and you could have a job one day, and be unemployed the next – and they’re perfectly within their legal rights to do so.
Once you pass your probation, your employer must give you a reasonable amount of notice if they decide to end your contract. This amount often goes up the longer you have worked for them, and it can give you the time you need to find new employment – which you’re unlikely to have if you’re on probation.
So, until you’ve passed your probation, there’s a risk you could lose your job without being given much notice. This is seen as risky to mortgage lenders as you could end up jobless and struggle to make your mortgage payments. That’s why many lenders will want to see that you’ve passed your probation or that you’ve been with a single employer for a set amount of time before they agree to lend to you.
Putting a job offer on hold
If you can, it’s worth mentioning to your potential future employer that you’re going through a mortgage application. They may understand and allow you to delay starting until you have your mortgage all sorted. If not, it’s worth prioritising which is more important to you at the moment. This might be a job you can’t afford to pass up on, so if it is, it’s probably best to accept their offer and put your mortgage application on hold.
On the other hand, if you’ve already had a couple of interviews but heard nothing back yet, it’s a good idea to focus on your mortgage first. Getting everything finalised with your new lender should be your priority if you haven’t had any offers yet.
If you’re thinking of going self-employed, you might want to get your mortgage finalised first. Starting your own business is also seen as risky by lenders, so you might even want to opt for a mortgage with a longer term than you were first planning. This is because lenders like to see that your business is stable and can ask you to provide your accounts for the year, so you might struggle to remortgage after just one or two years.
Will it affect my current mortgage?
Switching jobs when you already have a mortgage shouldn’t affect your current deal. In fact, you don’t actually have to let your mortgage lender know you’ve got a new job.
Of course, if you’ve been made redundant or your new wage is quite a lot less than what you were on before, it’s important to consider whether your mortgage payments are still affordable. If you think you might struggle, it’s vital you speak to your mortgage lender sooner rather than later. There is government support out there if you think you will struggle to pay.
But if your pay has gone up by quite a lot, when the time does come to remortgage, you could consider making larger payments and reducing the term. Or, if your current mortgage provider allows it, it’s worth asking if you can overpay without being charged. This way, you will be mortgage-free much quicker and you will pay less in interest overall.