If you have had your mortgage offer come through, you’re probably pretty excited to get into your new home. It’s an exciting process. However, sometimes it can take a while and you may have changed jobs after the mortgage approval. In that case, you’re probably wondering what you need to do.
In this article, we’re going to break down everything you need to know about changing jobs after mortgage approval.
Do I Need To Tell The Mortgage Company I Have Changed Jobs?
Yes, you need to tell the mortgage company about your new job. Changing jobs will affect your affordability for the mortgage. The lender will want to ensure you are still safe to lend to in your new position. In most situations, if you are earning similar amounts or more, your mortgage will still go through however if there are drastic changes to your employment they may pull the offer. For example, if you become self-employed, they are unlikely to continue with the offer.
Can You Not Tell The Lender About Your New Job
When you get a mortgage offer you legally have a ‘duty of disclosure’ period between applying for the mortgage and getting the keys to your house. Therefore you are legally required to tell them about any changes that are relevant to your mortgage application.
If you don’t tell them, they may perform further checks on you where they would find out anyway. If they do find out and you didn’t tell them, it’s unlikely they would make you another offer.
Why Does Changing Jobs Matter After Mortgage Approval?
Changing jobs is a concern to the mortgage lender as it adds more risk to the mortgage.
Change In Income
The biggest risk factor for the lender is a change in income. If you move to a job with a lower salary or different compensation plan such as commission it presents more risk to the lender. The lender may also require you to present 3 months of proof of income, so you may have to delay your home purchase for 3 months until you have that proof of income.
Probation Period
When you start a new job, you usually start on a probationary period. This is a period of time when your employer can end your contract on short notice. This would obviously make it hard for you to pay your mortgage, presenting more risk to the lender.
High Risk of Redundancy
If redundancies are being made in a company, those who are last in are usually first out. Moving jobs puts you at a higher risk of losing your job compared to someone who has been in their position for 5 years.
Is It Okay To Change Jobs After Mortgage Approval?
Changing jobs will not instantly get your mortgage offer pulled. It will depend on your specific set of circumstances. If you are moving to a higher-paying or similar-level position and still have consistent income there’s a good chance your mortgage offer will stand.
However, there are a few situations where the lender will be less likely to continue with the offer.
Self-Employment – If you are changing from being employed to being self-employed, this has a high chance of getting your mortgage offer pulled. The lender would have no way to know how much you can expect to make with your business. Your income is also going to be more variable as you go through the ups and downs of business.
Lenders will usually require a minimum of 12 months of tax returns but many want to see 2-3 years before they will consider lending to you. If you are going to go self-employed it would be better to wait until your mortgage is finalised.
Commission-Based Jobs – If you are moving from a job with a stable income to a commission-based job the lender may view this in a negative light. If your income isn’t stable month to month, they may pull your offer or lower the amount they are willing to lend.
Fixed Term Contracts – If you’re moving to a fixed-term contract, lenders are likely to look at this negatively as your job has an expiry date. This is a risk to the mortgage company.
Bonus-Based Compensation – If your new job relies heavily on performance-based bonuses, they may not be considered when calculating your affordability.
If you are moving to a similar or better job you are likely able to keep your existing mortgage offer and move forward with the deal.
How To Improve Your Chances Of Keeping The Mortgage Offer
If you want the best chance of keeping your existing offer you need to give the lender a full overview of your new job and present the case as to why it’s as good or better than your last job.
You should put together a copy of your new employment contract, salary amount, and other documentation around remuneration or bonuses.
Even with this, the lender may pull the offer in the short term. This would mean waiting for your probation period to end and then re-applying for the mortgage when you have proof of consistent income.
Final Thoughts
If you are changing jobs to a similar position or better, the change will hopefully not affect your mortgage application. However, if your job change is considerably different in terms of income or payment terms, your offer may be pulled until you can show consistent income.
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