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Your employment or job role and income are essential considerations of any mortgage application, and changing jobs after mortgage approval can complicate things.
The lender will need to reassess their view on lending to you, and depending on how your affordability has been affected, you may continue with the agreement, or the provider may withdraw it.
Here’s everything you need to know about changing jobs after mortgage approval.
Why Does Changing Jobs After Mortgage Approval Matter?
Changing jobs can mean your situation differs from when the lender assessed you and approved you for a mortgage.
Lenders want to be sure you can still afford to make mortgage repayments on time, which can be affected by changes to your stability and income.
Changing jobs can make you a risky borrower in a few ways, including:
Your Income Can Change
Your income is factored into your affordability, and if your new job has a different salary or income, you may not be able to afford repayments.
You may have previously proved your income to get approved, but that may no longer be true.
A decrease in income can invalidate the lender’s calculations and take you back to square one.
However, if your income remains the same or increases, you may convince the lender to continue with the mortgage.
You’ll Likely Be On Probation
Your new job will likely include a probation period, and an employer can abruptly let you go.
The less time you’ve been in a position, the less likely lenders will view you as a stable borrower.
Lenders assess probation periods on a case-by-case basis, and your job security can determine whether or not you get a favourable outcome.
For example, if you’re a specialist in your industry, the lender will likely view the job as secure even if you just started because it can be challenging to replace your skillset.
However, if you’re in low-skilled or unskilled work, your job security can be questionable since your role can be easy to fill if you fail the probation period.
You Face A Higher Redundancy Risk
Thousands of workers are made redundant every year, and although it’s uncommon, it can crop up from time in different industries.
If your employer is forced to make redundancies and you just started a new role, you’ll be most at risk as the newer employees are usually the first to go.
The longer the probation period, the higher your risk, and lenders may not view you favourably since there’s a more extended timeframe where you can be let go.
Should I Inform The Lender When Changing Jobs After Mortgage Approval?
Yes. You have a duty of disclosure from the moment you apply for a mortgage up to mortgage completion when the house sale goes through and you get the keys.
This means you have a legal obligation to inform your mortgage lender of all changes that can impact your application or affordability.
Some lenders can even perform random checks to ensure nothing can affect their decision, so they’ll likely find out about your job change and will probably not consider it favourably if you were hiding it.
It’s recommended to inform your lender when changing jobs after a mortgage approval, especially if the change means you may face financial difficulties that make it challenging to repay the mortgage on time.
Are Some Job Changes After Mortgage Approval Unacceptable?
Yes. Although affordability is the most important factor, some job changes can make it riskier for the lender to loan you.
For example, if you change from employment to self-employment after a mortgage approval, the lender can withdraw the approval as it’s considered a higher risk.
If the job change makes it difficult for the lender to understand your income or involves variable income, it can be tricky for the lender.
The nature of your income and how you earn your money can be primary concerns since lenders need to discern a baseline and conduct an affordability assessment.
Most lenders will only consider self-employed income if you’ve worked for 12 months and filed tax returns which can give an idea of your income.
If your new job relies heavily on commission, lenders will consider this as less stable, even if you’re making a higher income than a fixed salary.
If your new salary includes bonuses contingent on meeting in-job requirements, lenders may not consider them in the affordability assessment.
If the new job is on a fixed-term contract basis, the lender may not view you favourably since your job will end after a certain period and you can be let go without notice.
What To Do When Changing Jobs After Mortgage Approval
Start by compiling as much documentation for your new job as possible to provide evidence and inform the lender of the job change.
This includes copies of your offer of employment, salary amount, contract and other documentation around remuneration or bonuses.
If you have a similar or better job, you’ll likely be able to continue with the mortgage since you should be able to afford the monthly mortgage repayments.
Even if your income or salary decreases but you can prove comfortable affordability, your approval will not get affected.
The mortgage offer will only be withdrawn if the job change puts you in a drastically different situation. You may not get that particular mortgage, but you can likely qualify for another mortgage.
However, this involves starting the process again and waiting around three months to pass the probation period and accumulate enough payslips to prove your income is stable.
When changing jobs after mortgage approval, the outcome will largely depend on your circumstances, and the lender will consider all the information you present before making a final decision.
Changing Jobs After Mortgage Approval Final Thoughts
Changing jobs after mortgage approval can be risky for you and the lender and require a reassessment of whether or not you can continue with the initial agreement.
Don’t forget to consult your mortgage broker or advisor and inform them of the changes.
They can give you practical solutions to any problems your job change can cause and even find products that fit your changes if necessary.
Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.
