Applying for a mortgage with a new job

When you apply for a mortgage, most lenders will look at how long you’ve had your current job when considering your application. Lenders typically see a long employment period as a sign of a stable income that can ensure you can repay the mortgage. The longer your employment period, the better.

But how does starting a new job affect your chances of getting a home loan? With an increase in job switching in recent years, it’s important to understand how these decisions can affect your new mortgage application.

Compare home loans

Switching jobs doesn’t automatically rule out your chances of getting a home loan, but it can make the process more complicated. Lenders typically view stable employment as a sign of a steady income, which reassures them that you can repay your loan.

If you’ve just started a new job or are about to, lenders may assess your application on a case-by-case basis. Some lenders might require you to wait until you’ve completed your probation period, while others might accept your application if your income is sufficient to cover the repayments. 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.

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, and a casual job for at least six months. If you’re self-employed, you may need to provide 12 months of tax returns.

Besides your job history, lenders also consider other factors when reviewing your home loan application. For example, if you’re an experienced professional with other sources of income, savings, few liabilities, a good credit score, 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. However, frequent job changes, large gaps between roles, or termination during probation could raise concerns. 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, moving from one IT company to another might not affect your application much. But 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.

Some lenders may also consider the nature of your industry when assessing your mortgage application. For example, in fields like IT, contract work is common. If you’re on short-term contracts but have a history of consistent employment, lenders may account for that during their assessment.

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

Check your credit file

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.

Reduce your liabilities

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.

Provide accurate information

Providing accurate and complete information on your mortgage application is crucial to avoid unnecessary rejections and ensure a smoother approval process. Irrespective of how long you’ve been in your job, it helps to be 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.

Consider speaking with a mortgage broker

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.