Applying for a mortgage with a new job

If you’re starting a new job or have just begun a new job, it’s less likely that a lender will approve a home loan for you, though some lenders may still consider approving your application. It’s smart to ask around or work with a mortgage broker to learn more about which lenders are more likely to accept you, but don’t make multiple home loan applications as it may affect your credit score.

You may need to decide whether to wait to submit your application until you’ve started your new job, or to apply before you start. Lenders will use their own discretion to decide whether to approve your application if you’ve just started or before you started a new job. If your income from your current job is sufficient to repay the loan, they may be willing to approve your application before you make the change. 

Your type of employment also affects your mortgage application. Lenders often have different requirements for full-time employees, part-time employees, casual employees, and self-employed workers. Essentially, they’re looking for a consistent income that can ensure you can repay your home loan. Most lenders will require that you’ve been at your full-time or part-time job for at least three months, a casual job for at least six months, and if you’re self-employed you may need to provide 12 months of tax returns. 

A lot depends on your circumstances, and how lenders view home loan applications. For example, if you’re an experienced professional with other sources of income, a strong asset portfolio, few liabilities, a good credit score, savings, and a stable employment history, lenders may approve your application even if you’ve just changed jobs.

Lenders are more likely to approve your mortgage application if you can show that you’ve been stable in your employment for a long period. If the lender believes that you were either fired from a previous role or terminated during your probationary period, they’ll be less likely to approve your application. But if you’re moving to a new job for more prosperous or positive reasons, they may be more likely to approve your application. 

Many people will switch jobs but stay within the same industry, which may be seen as more favourable by lenders than people who change jobs and industries. For instance, if you’re moving from being a truck driver to an IT specialist, lenders may be more cautious or particular about you meeting all your probationary periods.

Lenders also look favourably on your application if there are minimal gaps in your employment history. For instance, if you’ve been out of work for a few months, they may be more cautious or require more information than if you’ve only been out of work for a month.

The trend of job-hopping may not be helpful when it comes to your mortgage application or credit score. Some lenders may consider factors such as the number of jobs you’ve had in a particular period and how often you change your address alongside your credit report when assessing your mortgage approval.

In some industries like the information technology (IT) sector, changing jobs more frequently is common, especially if you work under a contract arrangement. If you work under contracts, you may work at one place for a six-month contract and then a new place for the next six months and so on. Lenders are usually aware of this type of employment arrangement and take it into account as a part of your mortgage application.

Although being in a new job is not ideal for applying for a mortgage, there are some things you can do to improve your chances of getting your mortgage approved.

No matter your employment history, the first step is to review your credit file by requesting a copy from one of the credit reporting agencies. This will help you understand how the lender may see you as a borrower, how you can improve your credit and allows you a chance to correct any incorrect information on your file.

If you have debts, such as from personal loans or credit cards, you could consider consolidating your debts to find a lower interest rate or just to minimise your liabilities. However, be careful when combining short- and long-term debts, as loan terms could differ.

You could also consider consulting a mortgage broker to help you better understand your home loan options and borrowing capacity. They may also help you find a specialist lender who is more likely to review your application positively.

Lastly, it helps if you’re precise with your employment details. This will help the lender assess your earning potential accurately. For example, if your payslip shows an amount less than your gross income, you could provide the lender with a group certificate or a bank statement for a more accurate picture of your salary.