Getting A Mortgage With A New Job
Obtaining a new mortgage can be difficult at the best of times. Your employment status can influence your likelihood of getting a mortgage, along with other factors, including your credit score, credit report and monthly income.
If you have recently got a new job, the joy of your success may be overshadowed if you are trying to get a mortgage. There is a view that getting a mortgage with a new job is impossible, but this isn’t necessarily true. Albeit, the process does require some effort and you may face a few challenges along the way, however we have gathered some useful things to consider that may help you upon your mortgage application and beyond.
When you begin the mortgage process, like most other processes in financial loans, lenders will measure how much of a risk you are by looking at a number of different things – your employment history being one of them.
Why Is Getting A Mortgage With A New Job More Difficult?
In general, the less time you’ve spent working for a company, the higher risk you will be for a mortgage lender. There may be more specific reasons for this depending on each lender, but there are two main considerations that make people with a new job a higher risk:
Redundancy – generally speaking, the person who was last to be employed by the company is usually the first on the redundancy list, if the need arises. Lenders will consider this a risk because should you be made redundant, you may struggle to afford your monthly mortgage repayments.
Probation period – when you start a new job, your contract may be subject to your probation period. A probation period is a length of time the employee and employer are given to see if the new employee is suitable for the role, an offer is then made off the back of a successful probation period. Should you apply for a mortgage during this time, you will be seen as a higher risk because you and/or your employer may decide the job isn’t right for you, which means you will suddenly be unemployed with mortgage repayments to make.
Not being able to pay back your monthly mortgage repayments is not only a risk for a lender, but it is also a risk for you. If you fail to make repayments on a loan, your credit score will be affected and subsequently, it will be harder to get other loans in the future.
The Importance of Your Credit Score
But rest assured, getting a mortgage with a new job isn’t mission impossible. Most lenders will look past your employment position and focus on other things they deem more important; such as your credit score. If you have just started a new job but you have a good credit score with a clean credit history, you will be much more favourable to a lender because you have proven your affordability and your ability to pay your bills in full and on time.
The Importance of A Good Salary
When you apply for a mortgage, a lender will look at your monthly income to see if you will be able to afford it in the first place. If you are applying for a new job, having a good, steady salary will put you in a more favourable position during mortgage application because you can prove to lenders that you will be able to afford the monthly repayments. If your job is based on commission, you may be seen as more of a risk because your income isn’t steady or guaranteed.
This is also the case if you are self-employed, an income that is not guaranteed may be a red flag for some mortgage lenders, however, self-employment is becoming a lot more common and there are certain lenders who specialise in mortgages for self-employed individuals. If you are self-employed, you may be asked to show two years of tax returns to prove your affordability to a lender and some may even require you to have been trading for at least three years.
Getting a mortgage with a new job can seem daunting, but with a steady income and a healthy credit report and score, it can be achieved and you could be celebrating both a new home and a new job in no time.