In this brief guide, we are going to discuss how to go about getting a new job mortgage.
If you have just gotten a new job and you want to get a mortgage then you may be concerned about your mortgage affordability.
In truth, there is nothing such as a new job mortgage. Mortgage lenders simply treat borrowers who have just started new jobs with much more scrutiny.
If you are changing jobs and applying for a mortgage you may need a mortgage broker who could assist you to ensure you put your best case to the mortgage lender.
How to get a new job mortgage?
New job mortgages are just like any other mortgages. Borrowers who have new jobs often struggle to prove to the mortgage lender that their current job roles are secure and the income coming from the job can be guaranteed for the foreseeable future.
The above is especially true if you are still on your probationary period.
Most mortgage lenders prefer to see borrowers who have been in their jobs for at least 3 months and some other mortgage lenders will demand that borrowers have been in their jobs for at least 3 years.
When applying for a mortgage most borrowers will also expect you to have at least 3 months worth of payslips.
This means that you will at least need to have been in your new job for 3 months for you to get a mortgage offer with most mortgage lenders.
There are however specialist mortgage lenders who may be able to offer mortgages to borrowers who have new jobs even if they do not have 3 months worth of payslips.
This will, of course, be on a case by case basis.
Another reason why most mortgage lenders scrutinize borrowers who have new jobs is that when employers need to make redundancies they will usually let go of employees who are new to the job.
What mortgage deposit do I need for a new job mortgage?
The mortgage deposit requirement for a new job mortgage will be the same as most mortgages.
You will usually need at least a 5% mortgage deposit but as with most mortgages, the higher your mortgage deposit, the lower your mortgage rate and the increased likelihood you will get the mortgage.
This is because you are essentially reducing the mortgage lenders risk by putting down a bigger mortgage deposit and reducing their loan to value.
There are also government schemes that may be able to help you increase your mortgage deposit and hence your mortgage affordability.
Government schemes for a new job mortgage:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy- same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
What documents do I need for a new job mortgage?
When getting a new job mortgage you may need:
3 months worth of payslips
3 months worth of bank statements
Your employment letter
Can I get a mortgage if I am on probation?
Yes, you may be able to get a mortgage even if you are on probation. Borrowers who are on probation will usually have two main issues when seeking a mortgage.
The length of their probation and the notice period they have.
The length of your probation will determine how long you need to wait before you have a secured job with a typical notice period of at least one month.
When on probation the notice period could be as low as 1 week and this can make your financial wellbeing a lot more precarious.
Mortgage lenders are very conscious of this and hence giving mortgages to borrowers who have just started new jobs will be judged on a case by case basis.
The mortgage lender may look at your experience in the industry, your wage at the job and the type of job you have.
Getting a mortgage when changing contracts
If you are changing contracts within the same company then you may have some issues getting a mortgage if you do not present your mortgage case o the lender in a way they understand.
This is a very minor problem and simply requires you to explain your situation to the mortgage lender.
You may want to get a written letter from your HR department stating your situation.
Getting a mortgage after a pay rise
If you have just gotten a pay rise and want to get a mortgage using your new income figures hen this is very possible.
However, you may not have payslips which show your current income and hence your mortgage affordability may be much lower.
You should provide a written and signed letter from your company showing that you have just been given a new contract with a new wage.
Getting a mortgage with a future pay rise
If you are expecting a future pay rise but are also looking to get a mortgage before this payrise comes into effect then there are ways to get the mortgage lender to consider your future pay rise and hence increase your mortgage affordability.
You should geta written conformation from your current employer that your salary will rise in the future and by how much.
Not all mortgage lenders will consider this, especially if the future pay rise is not a 100% guarantee.
There are specialist mortgage lenders who will accept this and your mortgage broker may be able to help you with this.
Remortgaging with a new job
Remortgaging with a new job tends to be much easier than getting a mortgage with a new job.
This is due to the fact that you are already making monthly mortgage repayment and hence there is a history of your repayment behaviour.
Most mortgage lenders may, therefore, consider your mortgage application
Can I get a new job mortgage with bad credit?
Getting a new job mortgage with bad credit may be difficult as mortgage lenders may usually want to lend to borrowers who have a good credit score and have shown a good repayment history on all their previous debts.
There are however mortgage lenders who will offer a new job mortgage to a borrower depending on what type of bad credit was and what the circumstances were.
If it was a CCJ which was satisfied and is a certain age then some mortgage lenders may be willing to lend. Other mortgage lenders may lend if the CCJ was a maximum amount.
When looking to get a mortgage with bad credit the requirements from different mortgage lenders will differ and a bad credit mortgage broker may be able to assist you in getting a new job mortgage.
Bad credit could include:
A debt management plan
A home repossession
Can you get a home-loan with a new job?
Yes, getting a home loan with a new job is certainly possible. Secured loans are usually much easier to get due to the security (your house) on the loan.
If you have a good credit score then you could get a secured home loan with up to 6 times your income.
FAQs: New job mortgage
How long do you have to be in a new job to get a mortgage?
Usually, mortgage lenders will want to see that you have been in the job role for at least 12 months but there are mortgage lenders who will consider less.
Use a new job mortgage broker
You may want to consider using an independent mortgage broker to get a mortgage.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.
In this brief guide, we are going to discuss how to go about getting a new job mortgage.
If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.