Will changing jobs affect my ability to get a mortgage?

I get asked this question a lot. It depends on whether you are going from one employed job to another, going from employed to self employed, or you have had a gap in employment. We’ll look at each scenario in turn.

New Employed Job

If you’ve leaving your current employer to start with a new employer then in general the mortgage lender will either need the first 3 months payslips in your new job, 1 month’s payslip, you to have started your new job or due to start your new job within 3 months. It depends on the lender and each lender has its own policy. It will need to be permanent and a probation period is usually not an issue.

However, if a significant part of your earnings was commission, bonus, or overtime then unfortunately the lender won’t accept that income for affordability purposes because that has not been demonstrated yet with your new employer.

If you took a new job, however, on a zero hours contract in general you will need to have been in your new job for 12 months.      

Newly Self Employed

Whilst the lending criteria is pretty good going from one employed job to another it’s not the same going self employed. In general mortgage lenders will need you to have been self employed for at least 2 years, with a minimum of 2 year’s worth of accounts or tax returns submitted and most lenders will average the 2 years worth of income assuming the income has increased.

For sole traders and partnerships the lender will base their lending on your taxable net profit.

If you have set up your own limited company rather than as a sole trader or partnership lenders tend to lend based on your salary and dividends you have paid yourself. Some lenders will consider lending based on your salary plus share of net profit after tax. This can be very useful if your company has made good profits, but you did not take all of the profits out as dividend, even though you could have from those profits.

A few lenders will consider lending based on 1 years trading but often that will require a larger deposit.

Lenders also need to be satisfied too that you have not been affect by the government’s lockdown policy. If you have been affected and bank statements show a reduced level of turnover (sales) and possibly received a government grant that may reduce how much they can lend or possibly not lend at all until your business turnover has returned to pre-lockdown levels.

Gap in Employment

If you took a break from work for a while this could affect your ability to get a mortgage. Whilst most lenders do not have an issue if you’ve been not working for a considerable time some do. If you are a contractor in IT or project management who tends to have 3 or 6 months contracts for example then a gap in employment can potentially affect the likely mortgage options.

If your circumstances in employment might change or have changed then a good mortgage adviser can help with trying to find a mortgage lender whose requirements suit your situation.