Changing jobs can provide many benefits, such as higher income, greater fulfillment, and the opportunity for growth. However, it is important to consider whether it could also affect your mortgage application.
According to recent research from LinkedIn, 59% of workers are considering leaving their current jobs in 2023, with over half feeling confident about finding a better opportunity. Coincidentally, this could be a good time to consider purchasing a property, as house prices have recently experienced a record decline of -8.40% in January 2023 from their May 2022 peak.
Whether a job change impacts your mortgage application depends on various factors. Frequent job changes over short timeframes could raise concerns with lenders, as they prefer to see stability in employment history and financial profiles to assess the ability to make mortgage payments.
While a fresh job change could be viewed as an added risk by lenders, it may still be possible to secure a mortgage with a new job. Low-impact changes, such as switching to a permanent, salaried role in the same industry, are typically considered less risky by lenders.
However, high-impact changes, such as a career overhaul, starting a business, or switching to casual, contract, or freelance work, may result in more difficulty with the mortgage application process. These types of changes often involve lower-paying roles, higher pay rates without benefits, or taking time to thrive in a new industry or business, making them more challenging for lenders to evaluate.
Applicants may need to provide more than the typical two to three payslips, and some lenders may require employment in the new role for at least three to six months. Self-employed applicants usually need to provide at least a year’s worth of business income records.
Working with a professional can make the process easier and help identify lenders more likely to consider individual situations. Therefore, if a career change and a new property purchase are on the horizon in 2023, it may be beneficial to seek assistance from a financial professional.
