At UK Property Finance, we are often approached by clients concerned that their new employment status could harm their eligibility for a mortgage. This concerns clients in a variety of situations:
- Applying for a mortgage after switching to a different company
- Mortgage applications when changing roles or departments
- Eligibility for a mortgage after a pay rise or alteration
- Applying for a mortgage when planning to start a new job
- Mortgage eligibility during initial probationary periods
- Qualifying for a mortgage on a temporary contract
- Mortgage applications when joining the job market for the first time
- Applying for a mortgage when switching to self-employment
It is possible to access a competitive mortgage in any of the above scenarios. You will need to know how to submit a convincing application while ensuring you only target appropriate lenders.
Getting a mortgage when starting a new job
With most lenders, you are expected to demonstrate stable employment with the same employer for at least 12 months in order for your application to be considered. It is becoming commonplace for lenders to demand a minimum of three years with the same employer as a prerequisite.
This has proved problematic for ambitious employees chasing bigger and better things. You start out with a new company in a more advanced role with an elevated salary, but you are still technically a newcomer. Many major banks and lenders will not consider your mortgage application for several months or even years.
The more dynamic lenders on the UK market will be happy to consider your new contract from your very first day. If you can provide evidence of your upcoming position, you may be able to apply for your mortgage several months before you actually start your new job. It is a case of providing sufficient evidence of your income, your financial status, your credit history, and so on.
Changing contracts within the same company
This typically doesn’t prove quite as problematic with mainstream or independent lenders in general. If you remain with the same employer, switching from one contract or department to another doesn’t affect the time you have been with the company. If you have worked there for six years and switched to a different position or department, you have still technically been with the same company for six years, irrespective of what you do there.
There are, however, lenders who continue to scrutinise these kinds of transitions quite excessively. It may be necessary to stay in your new role for several months (or even years) before they are willing to offer you a mortgage. This applies to just a select few major lenders but should nonetheless be taken into account when submitting your applications.
Eligibility for a mortgage after a pay rise or alteration
You could think that immediately after qualifying for a pay raise, you will find it easier to qualify for a mortgage. You would also expect to be able to request a higher amount from your lender. This isn’t always the case.
Proof of income means providing payslips or accounts for several months or a year, not just evidence of what you are earning today.
There are plenty of independent specialists who are more flexible in situations like these and will consider your application based on your current earnings. If you are in a stable position with a good track record, you may be able to qualify for a higher mortgage amount. You may also find that your new higher-income status opens the door to a more competitive mortgage with lower overall borrowing costs.
Mortgage eligibility during initial probationary periods
The problem with a probationary period is that you technically aren’t on a permanent contract yet. You can expect your application to be turned down by most major lenders. As your initial contract may only extend for a few months, this is considered an unacceptable risk by most mainstream banks.
Specialist lenders are more likely to consider an application from a client who is working during a probationary period. For example, if the applicant is in a strong financial position and can afford a mortgage, their application will probably be accepted. If there is no reason to suspect that their contract will not be made permanent (or at least extended), they may be offered a competitive deal.
It is advisable to avoid mainstream lenders entirely if you are currently on a probationary contract.
Qualifying for a mortgage on a temporary contract
As far as mainstream lenders are concerned, any contract that isn’t permanent and stable is considered risky. Irrespective of your general financial position and track record, this is a deal-breaker that will count you out of the running. Specialist lenders, however, will look at different criteria and will be more flexible in their approach when dealing with your application.
If you have any questions or concerns regarding your eligibility for a mortgage as a temporary worker, we can help. Contact a member of the team at UK Property Finance to book your obligation-free consultation.
Mortgage applications when joining the job market for the first time
Every lender across the board will assess your eligibility for a mortgage based on multiple factors and criteria. Your financial status and income are perhaps the most important of all. If you have only recently joined the job market as a newcomer to permanent employment, you may find it extremely difficult to qualify with any mainstream lender.
There are instances, however, where mortgages are available for those joining the job market for the first time. It is a case of providing sufficient evidence of your financial position and your capacity to cover the costs of the loan. For example, it could be that you have extensive savings or a trust fund; you may be able to provide a larger-than-normal deposit; or you may have an alternative income stream.
It could also be that the position you have recently signed up for is extremely high-profile and well-paid. If you have walked into a prestigious position with an annual salary of £500,000, you are unlikely to be turned down for a mortgage loan of £150,000.
Applying for a mortgage when switching to self-employment
Conventional mortgage lenders tend to be particularly strict where self-employed applicants are concerned. Even if you have been successfully self-employed for years, you are likely to be scrutinised quite aggressively to even get your application through the door. If you have only just started out in self-employment following a position with a conventional employer, you may find the process even more challenging.
You will need to ensure you target the right lenders with your applications. Some lenders are far more interested in your broader financial status and track record than others. With a specialist lender, the fact that you have only just switched to self-employment may be inconsequential. If you can clearly cover the repayments and have enough on one side to cover the deposit, you have every chance of qualifying.
Applying for a mortgage as a self-employed worker can be uniquely challenging. We therefore advise seeking independent support prior to submitting your application in order to maximise your likelihood of getting a good deal.
Book your obligation-free initial consultation with UK Property Finance today, or drop us an e-mail anytime, and we will get back to you as soon as possible.