Can I change jobs while I am applying for a home loan?

Many lenders require you to be in a permanent job with the same employer for at least six months before applying for a home loan. If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your application’s chances of approval. But contacting the lender as soon as you know your employment situation is changing may allow you to come to an agreement.

Why do lenders want you to stay in the same job? 

Mortgage lenders want to be confident that a borrower can comfortably afford the repayments on a home loan before they’ll approve an application. To assess this, lenders will ask for records of your income and expenses as part of the home loan application process.

While having a high income and low expenses is often a good thing, a consistent income can be just as important. This shows that your finances are more likely to remain stable over time, and you are more likely to be able to afford your repayments as required.

If you change jobs or careers often, there’s a higher risk that you could end up defaulting on your mortgage repayments, as you may not always be able to maintain your income when moving between employers.

Keep in mind that most lenders will concentrate primarily on the income that’s paid by an employer as part of your normal wage or salary when you apply for a home loan. Extra income, such as bonuses and commissions, may not be considered as it may not be a consistent feature of your income stream. This is also why freelancers, contractors, sole traders and so on may need to apply for low-doc or alt-doc home loans.

Can you apply for a home loan if you're in a new job? 

The longer you stay in your job, the more comfortable a lender may feel about the stability of your finances. Different lenders have different minimum standards for how long they’ll want you to stay in a job. If your employer has a probationary period, passing that period is often a good first step. Staying in a job for at least 6 months to a year or longer could greatly improve your chance of approval.

What if you get a new job while applying for a home loan? 

Moving to a new job could complicate a home loan application that’s in progress, as the lender requires accurate information to assess your finances. If you start your application in one job then move to another, your income and expenses will no longer be correct, and the lender will need to recalculate your ability to service the repayments.  

Informing the lender of your change in role as early in the process as possible could help to make things a little bit easier, as the lender will have more time to account for the changes to your circumstances.

Sometimes a lender may be willing to reconsider your home loan application if you’re moving into a new job that’s still in the same area you’ve worked in in the past e.g. if you’ve worked in accounting for years and have just gotten a new job with a different firm. It could also help if the new role offers higher pay.

It may also be helpful to provide the lender a letter from your employer vouching for you, as this could demonstrate that you’re moving into a secure new role. 

You could also consider contacting a mortgage broker for assistance with your application. Brokers are mortgage experts that can help you find the lenders that are more likely to accept an application when you’re starting a new job. They may also be able to negotiate with the lender on your behalf and help you manage any complications in the application process.

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