How to Get a Mortgage with a New Job

Receiving a formal job offer letter is exciting. You will embark on a different career path and meet new colleagues. However, getting a mortgage with a new job is less exciting. In an ideal world, you would only need to consider finance options once you are settled in a job role. In reality, some borrowers have no choice but to apply for a secured loan whilst simultaneously starting a different career.

For those readers in that situation, this article will be informative for you. There are many factors that can influence your ability to obtain a mortgage if you are starting a new occupation. Let’s explore those factors in depth and advise on the best way to proceed with an application.

There are no specific mortgage new job products on the market but lenders have different criteria when it comes to accepting applicants with a new occupation. After you have read this article, you should have a good understanding of your ability to access a secured loan from your present working circumstances.

Short for time? Here’s a quick video explaining how to get a Mortgage with a different occupation:

Can I get a Mortgage with a New Job?

Yes, you can get a mortgage with a new job. Borrowers often refer to this secured loan as a new job mortgage. There are many factors that banks and building societies will consider before they agree to lend on a property. A few of these factors are quick considerations for the lender. These include:

• If you are Changing Job Role or Company
• If you have a Probationary Period
• Your Relationship with the Business
• Your Ability to Perform the New Job in the Long-Run

Changing Job Role or Company

A new occupation may mean a promotion/demotion within the same business. It may also mean starting a job for a different company.

If you receive a promotion at your existing workplace, most lenders will accept the newly signed employment contract as proof of income. You should be able to use the contract as proof of income, rather than needing to supply consecutive payslips in the new role.

Whereas, if you change company, providers are more likely to require you to work in the new position for at least 1 month before they can consider an application from you.

This is especially likely if your contract has a probationary period.

If you change job during a mortgage application, you should inform your mortgage broker immediately. This is because some lenders may accept the job change, whereas others will decline your application.

Probationary Periods

If you have a probationary period in your contract, this will be a consideration for underwriters.

This is because you are technically on a trial period with the company until you pass probation. Therefore, your job security and ability to make monthly mortgage repayments is not reliable until you are signed off.

For this reason, some lenders may insist that you pass your probationary period before they can consider a mortgage application from you.

Clients often ask: can you get a mortgage during a probation period? The answer is yes.

You may be surprised to know that many providers, especially on the high street, are often happy to accept new contracts with probationary periods. They can even accept applicants that are currently working through probation. It tends to be the smaller lenders, like niche building societies, that need to see a track record of you working for a company before they can consider an application.

A mortgage broker, like Boon Brokers, can offer expert advice to help you navigate the market. The aim is to identify your most suitable product and generate a mortgage offer with the chosen provider.

Relationship with the Business

Your relationship with your new employer can be a significant cause for concern with mortgage providers. For example, if you are starting a new job contract for a family business, lenders may insist on at least 3 months of consecutive payslips before considering your application. This is because they will be skeptical that you are only joining the business temporarily in order to obtain the mortgage. Some providers may even insist on at least 6 months to be sure that you are working for the business permanently.

However, if you have no prior relationship with the owner(s) of your new employer, this factor should not be a cause of concern when you submit a mortgage application.

Ability to Perform the New Job in the Long-Run

If you are applying at a new company, and it is your only occupation, mortgage lenders will be satisfied that you can perform the role in the long-run. However, an issue may arise if you are starting a second job.

Mortgage underwriters will assess whether you are likely to be able to perform both jobs simultaneously over the entire mortgage term.

If the underwriters are skeptical, they may request 6 months of consecutive payslips in both jobs before lending.

Let’s explore the more indepth factors that mortgage underwriters are likely to consider.

How Long Do I Need to Have Been in a New Job For?

Most new job mortgage lenders will require you to work in your new role for at least 1 month before you can submit an application. This is so that you can demonstrate your permanent occupation in the business. For many years, most mortgage providers required 3 months of payslips in a contract before they could consider an application. This is because they wanted reassurance that a borrower had a stable income to pay their mortgage on time. However, this has recently changed in the market. They typically request a payslip with corresponding bank statements so that they can prove your receipt of the income. Furthermore, most mortgage lenders no longer request P60 documents.

There are some new job mortgage lenders who will accept a signed employment contract as proof of income. This means that you can submit your application from the date that you start the new job role.

Some providers will even allow you to proceed with a signed employment contract with a future start date. For example, this could be two months from the date of your mortgage application.

Lenders with such lenient eligibility criteria are few and far between. To access them, you should speak with one of the fee-free, whole of market brokers here at Boon Brokers. A mortgage broker can identify the most suitable lenders for your requirements and provide you with a mortgage proposal at no cost to you.

Using Bonuses, Overtime or Commission

If you need to use bonuses, overtime or commission to boost your maximum mortgage sum, you will almost certainly need to work in your new job for at least 3 months. This is because of lenders’ eligibility criteria for assessing additional income. Additional income is any income received on top of the standard salary payment.

Mortgage lenders will typically average ‘additional income’ over the latest 3 months of payslips as a minimum. They then extrapolate that averaged monthly figure over a year to obtain an approximate annual income amount.

Typically, this additional income must show on at least 2 of the last 3 payslips. If it does not show, lenders will normally dismiss it.

If you receive fortnightly, quarterly or annual bonuses, mortgage lenders will normally request the latest 2-3 payslips showing these bonus figures before they can account for it.

However, depending on the type of contract, you may need to work in your new job for longer than 3 months before applying for a mortgage.

Income Proof Required for Different Employment Contracts

Moving to a different job can be daunting especially if you are changing to an unfamiliar contract.

The most common types of employment status are: Permanent, Part-Time, Fixed-Term, Zero-Hour and Agency Work.

If you are about to start on one of these contracts, let’s explore the impact that it will have on your ability to access a mortgage.

Permanent Contracts

Most employment contracts offered in the United Kingdom are on a permanent basis. With this contract, you agree to offer your services continuously to your employer with no end-date. These contracts are typically written on a full-time basis.

Mortgage lenders may accept a signed employment contract from you if the contract is on a permanent and full-time basis. If the contract is just for a salary, with no additional income, eligible lenders are even more likely to accept the signed contract. This means that you may not need to work for multiple months before applying for a mortgage. Some providers will even accept permanent contracts from applicants embarking on their first job in the workplace.

You may be wondering, how many payslips are needed for a mortgage? You should still expect to give your mortgage broker at least 1 payslip in your occupation to access a wide range of lenders.

Part-Time Contracts

Working on a part-time basis is becoming increasingly popular in the UK. These contracts are similar to full-time contracts. The key difference is the number of hours agreed to work. Part-time workers will receive the same hourly rate as full time workers.

A mortgage lender may hold the position that as long as the contract is on a permanent basis, they can accept a signed employment contract. This is regardless of whether the contract is full-time or part-time.

Although, your income is more likely to vary on a part-time compared to a full-time contract. If your income changes from month to month, you should expect to need 3 consecutive payslips before applying for a mortgage.

Fixed-Term Contracts

Employment contracts written on a fixed-term basis are more complicated for mortgage lenders to consider. Workers may serve multiple employers over several years

A strong consideration for mortgage lenders is your line of work for each fixed-term contract. If you can prove that you consistently receive fixed-term contracts in the same line of work, mortgage lenders are more likely to accept your application. This is because you have proven yourself in the occupation and are likely to receive subsequent contracts.

However, if you are starting a fixed-term contract in a different line of work, perhaps in a new industry, mortgage lenders will be more skeptical. In that situation, most lenders will require you to have at least a 2-year track record in role before considering your income.

For new fixed-term contracts, mortgage lenders care far more about employment history than they do with other types of employment. Lenders will typically request the signed fixed-term contract as proof of income and the latest 3-12 months of payslips.

Zero-Hour Contracts

Many industries still operate with zero-hour contracts. These contracts allow employers to only call on workers when they are required. Workers are paid when their services are utilised by employers. For mortgage lenders, these contracts are seen as high risk. This is because the applicant’s monthly pay can differ significantly from one month to the next.

For this reason, zero-hour contract workers will need to provide a minimum of 12 months consecutive payslips in a new job before they can apply for a mortgage. This is standard criteria across the mortgage industry.

Mortgage lenders will then assess each payslip to calculate an annual income. This figure will be used to calculate a maximum loan sum.

Agency Work

Agency workers are assigned work from an agency. They may work for different companies on a weekly basis but they receive payment from their agency.

Agency workers are typically offered temporary employment contracts. So the question is, can you get a mortgage with a temporary employment contract? The answer may be yes. Mortgage lenders will treat agency workers similarly to zero-hour contract workers. As their work is not permanent, mortgage lenders will ask for at least 12 months of consecutive payslips (or invoices) in the new agency before they can consider a mortgage application.

An experienced mortgage broker, like the fee-free advisers working for Boon Brokers, will understand lender requirements for agency workers across the United Kingdom. By using an expert advisor, you will improve your chances of receiving a mortgage approval.

What happens if my salary changes?

If you start a new job and your salary changes, this could be beneficial or detrimental to you. This depends on whether you have received a pay rise or a pay cut.

Salary Increase

If you receive a pay rise from your employer, perhaps from a promotion, most mortgage lenders can use this salary increase immediately. They will usually request a letter from the employer confirming the pay rise. Some lenders will request 1 payslip accounting for the increased salary before accepting it. However, lenders rarely require any further income proof.

Following your pay rise, you should be able to access higher mortgage sums as your affordability position will have improved. This is assuming that your financial commitments, deposit, and other factors that influence mortgage affordability remain unchanged.

Salary Decrease

If you receive a pay cut from your employer, this will negatively impact the maximum loan sums available from mortgage lenders. As you would expect, lenders would disregard your previous income and instead base all affordability calculations on your reduced salary.

If your salary has changed as a result of a new job, it is likely that you will need to work for at least 3 months before you can declare additional income. This is because there has not yet been a track-record of your earnings with further income on top of your salary. As discussed, additional income can include bonuses, overtime and commission.

Starting a Self-Employed Position

Getting a mortgage when self-employed is often far more challenging than it is for employed applicants. For this reason, mortgage advice from an expert mortgage advisor is recommended for self-employed applicants.

As discussed, employed applicants may be able to apply for a mortgage based on a signed employment contract alone. Whereas, self-employed applicants need to prove to lenders that their income is sustainable in the long-term. Mortgage lenders are aware that over half of new businesses fail within three years of opening. For this reason, they are cautious when lending to self-employed applicants that have just started a business.

Mortgage lenders will request your latest Tax Calculation and Tax Year Overviews documents as a bear minimum. Most lenders will request the latest 2 years of those documents.

Tax Calculation and Tax Year Overview documents are generated once you submit your Tax Returns to HMRC. View our self-employed mortgages guide for full details on how you can access those documents. Mortgage underwriters used to accept Tax Returns as income proof. However, this is no longer a requirement in the mortgage market.

If you are starting a new self-employed job, you will understand that there are different types of Self-Employment. These types are:

Mortgage providers will request Tax Calculations & Tax Year Overviews from Sole Traders, Partnership Owners and Limited Company Directors.

Mortgage lenders will class you as self-employed for income proof purposes if you own more than 25% of a Limited Company. Even if you receive payslips from the company, these will not be accounted for by lenders.

Remortgage with a New Job

You may be wondering how starting a new job will impact your ability to remortgage. Ideally, you would proceed with a remortgage application once you are settled in your new role. This would ensure that you have access to a whole of market range of lenders. However, in reality many people seek a career change out of necessity rather than it being their choice.

Remortgaging occurs when you either:

1. Redeem an existing mortgage with a new secured loan
2. Secure a mortgage to an unencumbered home

Read our mortgage services page on Remortgage advice for full details on the process.

Fortunately, many mortgage lenders have lenient criteria for their remortgage products regarding applicants with new occupations. However, the criteria is different for remortgages compared to product transfers. 

Remortgaging with a Different Lender

If you plan to remortgage after starting a new job, you will need to provide the other lenders with proof of income. As discussed, this may be in the form of a signed employment contract or at least your latest payslip in the new role.

When accepting mortgage applications from new customers, lenders tend to have the same income criteria for purchase and remortgage business. Therefore, if you have arranged a mortgage for a purchase transaction previously, you should expect a similar process when you remortgage. The criteria highlighted in the previous sections of this article will also apply to a remortgage.

Product Transfers

If you are hoping to process a product transfer with your existing lender, they may not require any income proof. Instead, many lenders accept an electronically signed declaration from you confirming your income. Mortgage lenders are often happy to trust your declaration because they have a track record of mortgage repayments from you.

Saying that, if you are in mortgage arrears, you may find that you are unable to process a product transfer with your existing lender.

Buy to Let Mortgages with a New Job

Buy to let mortgage providers have lenient income criteria compared to residential lenders. In fact, there are many buy to let lenders that do not require applicants to be in receipt of any income. This is because they largely calculate maximum mortgage sums from the property’s anticipated rental income. Although, this is only true for interest-only mortgages. As the monthly rental income should exceed the interest-only monthly mortgage payment, the lender has security in knowing that the mortgage payments should be maintained. To reduce their risk exposure further, buy to let providers also insist on at least a 20% deposit of the property’s valuation.

If you are applying for a capital repayment buy to let mortgage, your new job will be factored into the lender’s mortgage affordability calculation. This is because the monthly mortgage payment is far higher for capital repayment products than it is for interest-only deals.

Therefore, as long as you are applying for an interest-only buy to let mortgage deal, a new job should be inconsequential with most lenders.

An applicant’s income is usually only important for buy to let mortgages if top-slicing is required. Top-slicing is where a mortgage lender will use the applicant’s income, in addition to the rental assessment of the property, to boost the maximum loan available. In these instances, a buy to let lender may request up to 3 months payslips in your newly employed job role before proceeding.

Speak to a Specialist Mortgage Broker

Starting a new job will always make applying for a mortgage or any other type of credit more complicated. Moving jobs can be seen as a risk for lenders, as they want to see a history of employment and income. They need to be reassured that you will be able to repay your mortgage loan for the term that is arranged.

Whether you are starting a new career, or joining the many other people moving into self-employment, the best way to make sure that your mortgage application is accepted is to speak with a specialist broker. A broker will discuss your mortgage options in depth and explore other factors that could impact your ability to access a secured loan. For example, your credit history, deposit, age, etc, can play a role in your ability to raise finance. There are many mortgage providers to choose from.

Do you have any questions? If you would like to discuss your current job situation, get in touch with an expert mortgage advisor on 01508 483 983 or complete our Request a Callback form. Our specialist mortgage brokers have years of experience in helping people with new jobs get the best mortgage deals. The best part is, Boon Brokers does not charge client fees at any stage of the home buying process. Lenders pay our commission, so you don’t have to.