Mortgages for self employed who have recently become employed
Mortgages for employed applicants within a probationary period
Mortgages for applicants who have been employed for just one month
By residential mortgage expert Mr Payam Azadi
Expert comment: “Just changed your job and need a mortgage? Well the good news is there are options open to you. However there will be inevitable objections from lenders that we need to either overcome or circumnavigate by selecting a good choice of lender at the outset.”
Life is going well: your career is on the upturn following a recent job switch and there is even a level of optimism in the economy. And with interest rates low you think its time to purchase a larger home.
It is true to say that residential mortgage lender’s base their assessment on the level of income you receive. Therefore the more you earn the greater your capacity to borrow. However, what is not so obvious is lenders also want your employment history to be stable.
A recent job move can affect your mortgage chances but there are solutions open to those in the know, such as a well informed Mortgage Broker. Read on to find out more…
I have recently changed my job and want a mortgage and my lender has said ‘no’
The standard position for the UK mortgage lenders is 3 months or 6 months in your current position. This is often has the further caveat that you cannot have more than 3 jobs in the last 12 months.
Why is does the ‘3 month or 6 months’ mortgage rule apply. Well quite simply the lender wants to know the position is of a ‘permanent’ nature. In the past most UK lender’s used to glean this piece of information in one or two ways: a phone call to the employer or an employment reference. This rarely is the process these days as it is labour intensive. As such payslips and bank statements are normally the source of income evidence and of course these do not provide the answer to the ‘probationary period or contract’ question. On balance, the lender assumes ‘permanency’ by the crude measurement of 3 or 6 months to ensure the employment position is ongoing.
What is the minimum time I need to be employed in order to obtain a Mortgage?
Depending on the lender there is ‘no minimum’ time limit with your current employer. That’s right we regularly help applicants obtain mortgages despite only being with their current employer for one or two months.
We can even help applicants that are still within a probationary period.
If your employment is on a ‘contract basis’ or you are on ‘maternity leave’ I suggest you read the recent articles on this site on these subjects which goes in more detail.
I have approached a lender and they have turned my down on their credit score because I have only been in my credit score
Your credit score is determined by the lender’s computer system. Its purpose is to screen the application on a cost effective automated basis and short list potential applications the lender wishes to genuinely look at. It attributes points to key areas of an application including length of employment and as such it could potentially reject your case with little or no meaningful explanation.
The majority of banks use credit scoring but there are some centralised UK lenders that do not work on this basis and they are typically available via Mortgage Brokers.
What documents will I need to provide to prove my income for a mortgage as I have recently changed jobs?
- Contract of employment
- P60 or March payslip to show your previous earning level
- Bank statement showing first months full pay (if you have been there that long)
- Last months’ payslip (if you have been there that long)
How can I help improve the chances of a successful mortgage application as I have just changed my job?
Concentrate on showing the positives on your mortgage application. A correlation between successive jobs and job titles helps. For instance, Care Home Assistant to a Nursing Assistant shows a natural progression. If the nature of the jobs is forever changing and you have had over three jobs in the last year expect the lender to ask probing questions and consider taking on a Mortgage Broker to help you with the responses.
For more information on getting a Mortgages please contact us on T: 020 7993 2044 or alternatively complete the simple enquiry form on the top right hand side of this page.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.