Starting a new job is a very exciting time. Embarking on a new career, meeting new people, taking on new challenges, there are lots of things to look forward to.
However, if you are currently at the stage of remortgaging in the next few months, starting a new job could have an impact on your application.
We take a look at any potential problems that you may face when starting a new job so that your remortgage can go as smoothly as possible.
Providing proof of income
With any mortgage, the lender will take you through their standard affordability checks. One of the biggest factors in this is your income. Most lenders will typically ask for three or more months of payslips to prove how much you earn. If you are just starting a new job, and unable to provide payslips, this could cause a problem.
Some lenders may accept a letter from your employer confirming your salary. Alternatively you may need to delay your mortgage application until you have been in the job for up to six months, or passed your probationary period.
If you are starting a new job soon but are still in your current role, you may be able to agree your mortgage before you leave. This way you could use your old payslips as proof of income.
A specialist broker should be able to identify the lenders that are most likely to accept your application when you have started a new job, factoring in all of the other relevant information that you provide them with.
A change in salary
If your job means taking a pay cut then you may find that lenders are less willing to lend you as much as when you took out your previous mortgage. However, perhaps your new job offers different types of financial incentives? Depending on the lender, payments such as commission, bonuses or other financial benefits may be included in your affordability calculations. However, if the payments aren’t guaranteed then the lender may not include them.
Of course, starting a new job could bring an increase in your salary. Assuming your outgoings remain the same, this is likely to increase your affordability. This means that you may be able to afford to borrow more money than you could previously.
A new job with a bigger salary, could mean being able to afford a larger home, or it could give you the opportunity to make overpayments on your mortgage to help reduce the overall term.
Remortgaging when self-employed
If you are considering making the move from employment to starting up your own business, you may wish to consider the impact it will have on your mortgage application.
Getting a mortgage when self-employed isn’t impossible. However, it can be more challenging. Income is often harder to prove for someone who is self-employed. Some lenders may ask for 12-24 months worth of accounts as proof of income. If you are just starting out with your new business this isn’t possible.
If you have plans to go self-employed, but you know your mortgage term is coming to an end, then it may be worth waiting. Taking out a mortgage application whilst still employed will certainly make the process more straightforward.
If you have already made the move into self-employment, and need to find a mortgage, then it may be wise to seek the services of a mortgage broker. With their in-depth knowledge of the market, a broker should be able to find the lenders that are more willing to accept you based on your current circumstances, including your employment status.
Unfortunately, starting a new job when applying for a mortgage is always going to make things a little more complicated. It may work out to be a great move for you in the long term, but in the eyes of the lender it’s security they are after. And that means a reliable employment history and proof of a secure income.
Whatever your circumstances, the best way to make sure of a successful application is to speak with a mortgage broker. You can discuss your current job situation and find out what impact it will have. They will help you to look for lenders that are more likely to accept you based on your circumstances.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE