Mortgages for Changes in Employment

Key Takeaways

  • Employment changes can significantly impact mortgage eligibility and terms
  • Specialist brokers are often essential for securing mortgages during career transitions
  • Lenders assess various factors beyond traditional employment status
  • Self-employed individuals and contractors face unique challenges but have tailored mortgage options
  • A strong financial profile can mitigate concerns related to employment changes
  • Preparation and timing are crucial when applying for a mortgage during career shifts

In today’s rapidly evolving job market, career changes and employment shifts have become increasingly common. However, these transitions can pose significant challenges when it comes to securing a mortgage. 

This guide delves into the intricacies of obtaining a mortgage during periods of employment change, offering insights and strategies for navigating this complex financial landscape.

Note: If you’ve struggled to obtain a mortgage due to a change in employment, or if you think you should be able to borrow more based on your earnings and career trajectory, contact us today for a free consultation with a specialist mortgage broker to see how we could help.

The Impact of Employment Changes on Mortgage Applications

When assessing mortgage applications, lenders primarily focus on the stability and continuity of income. 

Any significant change in employment status can raise red flags, potentially complicating the mortgage approval process. 

Traditional lending criteria often favour applicants with a consistent employment history, typically seeking at least two years of continuous employment in the same role or industry.

However, the modern job market’s fluidity has prompted some lenders to adopt more flexible approaches. These progressive lenders recognise that career changes, contract work, and self-employment are becoming increasingly prevalent.

Despite this evolving perspective, securing a mortgage during an employment transition remains a challenging endeavour, often requiring specialised expertise.

Specialist Mortgage Brokers for Navigating Employment Changes

For individuals experiencing employment changes, enlisting the services of a specialist mortgage broker can be invaluable. At Private Mortgages, we possess the expertise and industry connections necessary to secure appropriate financing for clients in diverse employment situations. 

Our role extends beyond simply finding available mortgage products; we work closely with lenders to provide a comprehensive understanding of your unique circumstances.

Specialist brokers can:

  1. Interpret complex employment situations for lenders
  2. Highlight the positive aspects of your career trajectory
  3. Provide insights into your earning potential
  4. Explain the nuances of various contract types and employment structures
  5. Identify lenders who specialise in non-traditional employment scenarios

By leveraging our expertise, you can overcome obstacles that may have hindered your mortgage application with traditional banks or non-specialist brokers.

Mortgage Eligibility During Career Transitions

Lenders employ various criteria when evaluating mortgage applications from individuals undergoing employment changes. Understanding these factors can help you prepare a stronger application:

Income Stability and Projections

While a consistent income history is preferred, lenders also consider future earning potential. If you’re transitioning to a higher-paying role or a more stable industry, this can work in your favour. 

Provide documentation that supports your projected income, such as offer letters, contracts, or industry salary data.

Nature of Employment Change

The reason behind your employment change matters. A strategic career move to a more senior position or a related field is viewed more favourably than frequent job-hopping or moves to unrelated industries.

Length of Employment in Current Role

Although two years is often cited as the ideal minimum, some lenders may consider applications from those with shorter tenures, especially if other aspects of the application are strong.

Overall Financial Profile

A robust credit score, significant savings, and substantial assets can offset concerns about recent employment changes. Demonstrating financial responsibility and a history of meeting obligations can strengthen your application.

Industry and Skill Transferability

Lenders consider the transferability of your skills and the stability of your chosen industry. Moves within related fields or to industries with strong growth prospects are viewed more positively.

Mortgage Solutions for Different Employment Scenarios

Different employment situations require distinct approaches to mortgage applications.

Here are some common scenarios and the strategies to address them:

Mortgages for the Newly Self-Employed

Traditionally, self-employed individuals faced significant hurdles in securing mortgages due to irregular income patterns. However, specialist lenders now offer products tailored to this growing demographic. These mortgages typically require:

  • A minimum of one year’s trading history (some may consider applications after just nine months)
  • Proof of income through tax returns, accounts, or projections
  • A strong overall financial profile to offset the perceived risk

Contractor Mortgages

Contractors, particularly those in IT, engineering, and other professional services, can access specialised mortgage products. 

These mortgages assess income based on the day rate rather than traditional salary calculations. Key considerations include:

  • Length and value of current contract
  • History of contract renewals or securing new contracts
  • Skills and experience in the relevant field
  • Presence of a limited company structure (if applicable)

Mortgages for Career Changers

Those making significant career shifts may need to emphasise the following:

  • Transferable skills from previous roles
  • Any relevant qualifications or training for the new position
  • The stability and growth prospects of the new industry
  • Any guaranteed income or progression opportunities in the new role

Strengthening Your Application During Employment Changes

To improve your chances of securing a mortgage during a period of employment change, consider the following strategies:

  1. Build a substantial savings buffer: A larger deposit and emergency fund can offset lender concerns about income stability.
  2. Maintain an impeccable credit history: Pay all bills on time and reduce outstanding debts where possible.
  3. Gather comprehensive documentation: Collect detailed records of your employment history, income, and future prospects.
  4. Consider a guarantor: In some cases, a guarantor with a stable income and good credit can strengthen your application.
  5. Time your application strategically: If possible, wait until you’ve been in your new role for at least three to six months before applying.
  6. Explore specialist lenders: Look beyond high street banks to find lenders who specialise in non-traditional employment situations.
  7. Prepare a solid business plan: For the self-employed, a well-crafted business plan can demonstrate your earning potential and business acumen.

Contact us today for a free consultation with a specialist mortgage broker to see how we could help you get the most out of your mortgage.

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