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How a Change in Your Employment Structure Can Affect Your Home Loan Application

The pandemic has brought about a rapid shift in employment, both in terms of where people are working (largely from home now) and how they classify themselves. Unfortunately, these changes can negatively affect your home loan application. We’ll look at how a home loan with a new job or working structure can affect your approval status and what you can do to maximise your odds of success.

Changing Jobs During the Mortgage Application

From your perspective, a change in jobs may not seem like a reason for your home loan application to change. However, from a lender’s perspective, they rely on your employment history, and more importantly, the income you make and what employment structure you make it under, to determine how much to lend and on what terms. If you’re going from a steady paycheck to contract work, even with the same employers, the lender will see this as simply less reliable than a full-time PAYG employer.

Of course, not every applicant will experience the same issues. If you can prove that you’re moving into a better position, one that provides equal or higher income, then you can avoid any disruption to the process. Shore Financial brokers understand that new job opportunities will present themselves in the midst of buying or refinancing and are known to work with applicants to ensure they get the same deal.

The best thing you can do is tell your broker as early as possible that you’re thinking about or have accepted a new position. This advice holds true even if you have already been approved for the loan. It’s not unusual for lenders to do a final verification just to make sure nothing has been changed since the original acceptance of the application.

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Can I Get a Mortgage if I’ve Just Changed Jobs?

It is possible, but you want to make sure you’re being proactive and keeping your broker informed every step of the way. Lenders want to see that you’re a reliable candidate who has a steady source of income. Unless your job has a strict end date, then the lender will assume the position is ongoing.

If you are going to change jobs, the lender will typically ask for the following documentation:

  • An executed offer
  • Title change letter
  • Written or verbal verification of employment from employer
  • Most recent payslip

When Can a Job Change Impact your Home Loan?

Typically, the impact will happen if there’s any question about the reliability of your income. If your old job has the same pay structure as your new one, then you may not have any challenges at all. As mentioned above, going to a position with the same or higher income can help you avoid any roadblocks in securing a home loan.

Conversely though, you might see some pushback if you’re doing any of the following:

  • Trading a salaried position for one based on commissions or bonuses
  • Becoming a self-employed or contract employee
  • Switching to an unrelated industry
  • Constant lateral job moves
  • Requesting a home loan without a job history

When applying for home loans, reliability is the key. If you’re constantly moving jobs without progressing, it may make a lender nervous that your income will rise and fall with every new position.

What are the Ramifications if you’re Thinking of Moving for a Job?

If you’re considering branching out on your own during the application process, you should consider if this is the correct time. Most lenders will want to see at least two years of being successfully self-employed.

If you’re being relocated, keep in mind the lender is likely going to want to see your first payslip among other things. If the new job is of comparable salary and aligned with your previous position, you shouldn’t have a problem but you should speak to your broker about what evidence of income is going to be required.

Shore Financial recommends speaking to a broker before you make any major decisions. There are situations where you won’t be able to buy a home because you’re changing jobs, so it’s important to share information and work with your broker to see if you will be able to sufficiently meet the lender’s requirements for a loan.

How Shore Financial Can Help You If You’re Considering a Career Move

There’s no need to put your career on hold entirely if you want a home loan, but you may need to make some informed decisions. 

To learn more about our services and how Shore Financial home loan brokers can help you decide, contact us today and tell us your story.

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