Property How a change in job status can affect mortgage applications

This post is over a year old. There may now be updates to the facts stated and the views of the author. Please read with this in mind or check for more recent articles in Property.

When you have a significant change in your job circumstances such as moving into self-employment, becoming a director or partner in a firm or a change in bonus patterns, your mortgage options can be affected. Don’t assume, however that getting a mortgage is going to be difficult or that using any new income is impossible.

Many lenders now have a more flexible outlook when looking at clients who have a recent change in employment circumstances and will take additional factors into consideration when assessing an application. Some will even work in advance of a change; for example, use an increased salary figure even ahead of that increase being received.

Professionals such as doctors, accountants and solicitors are likely to have a change in employment with, for example, promotion to partner or a move to a new practice. There are several high street banks that have a more flexible approach and will consider the new position and income in mortgage applications.

An example of this is a mortgage I sourced for a client recently. This client was a self-employed dentist moving from one dental practice, where he had three years of tax returns, to another on a self-employed basis.  The new practice was long established and he was taking over from a retiring dentist with an existing client bank. 

I managed to find a lender that would use the projected annual income from the new position, as this was supported up by the practice manager and the existing client bank.  This client had been told by several lenders prior to speaking to me that he needed a full year’s accounts from his new position before they could even consider the application.

This approach can work with other professionals when they are joining a business with a track record. 

For self-employed clients who are not joining an established firm there is also good news. There are now high street lenders who will work from one year’s full accounts if an accountant provides projections for the forthcoming year.

If annual bonus payments make up a large part of income, a new job historically has meant difficulties as lenders wouldn’t include the potential bonus in the affordability calculations.  This has changed recently with some lenders now considering the previous year’s bonus even if this is from a previous employer. This is as long as the new job is a similar role. 

Getting the correct advice is important when you have a change of circumstances or if you are thinking of making a change and planning to buy or refinance your mortgage in the near future.

Please feel free to contact me if you’d like to discuss your situation.

Rhys Edwards – Latest Blog Posts

Continue reading 'Tax relief reductions affecting landlords'

Tax & Planning Tax relief reductions affecting landlords

Reform of tax relief on buy-to-let residential mortgage interest was a surprise in the 2015 summer Budget and the latest instalment of changes came in last month. Rhys Edwards explains the implications of the move to the new system for buy-to-let landlords.

Continue reading 'Tax relief reductions affecting landlords'
Continue reading 'Is an interest only mortgage an option for you?'

Property Is an interest only mortgage an option for you?

Interest only mortgages are not as readily available as they once were, with only a small proportion of banks now offering them. For banks who still offer these products, there are a number of specific lending requirements. Rhys Edwards explains.

Continue reading 'Is an interest only mortgage an option for you?'

Cookies help us provide our services. By using this website, you accept our privacy policy  |  Accept cookies