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.