One of the most important things lenders will consider when you apply for a mortgage is your income. They want to be as sure as possible that you can afford your repayments and that you won’t default on your mortgage. Any factors that might have an impact on your income, like changing jobs, are going to be of interest to your lender. Hiding this information from your mortgage provider could land you in hot water further down the line and could even put your property at risk.
Agreement in principle vs mortgage offer
If you’ve started the house hunting process, there’s a good chance you’ve already received an ‘agreement in principle’ from your mortgage provider. As the name suggests, this offer is made on the principle that your finances and your situation are as they first appeared on your initial application. An AIP is useful for giving you an idea of how much you can borrow and is a good thing to show estate agents. It proves you’re serious about, and capable of, purchasing a property.
However as @HomeOwnersAll says:
“An agreement in principle doesn’t give any guarantees over what size of mortgage may be offered or even if they will lend at all.”
Once you’ve found a property you want to buy, you’ll need to submit all relevant documents to your mortgage provider. It’s at this point that your finances and your employment status will be properly scrutinised and your application will be approved or denied.
If you’ve changed jobs since you got your ‘agreement in principle’, you’ll have to tell your lender. When you supply your proof of income and proof of employment documents, your mortgage provider will be able to see instantly that your circumstances have changed and your AIP is invalid.
Why does it matter if you change jobs?
In general, mortgage providers don’t like lending to people who have recently changed jobs. This is because their role within their new company is seen as less secure and therefore their financial situation is less certain. Some lenders won’t approve applications from employees who are on probationary periods or from those who have been at a company for less than a few months. If possible, try to put your job change off until after your application has been approved and you’ve started paying off the loan. At this point your mortgage is already set up and you won’t need to inform your lender about your change in circumstance.
If you’re currently thinking about buying a new home and want reliable, expert advice about securing a mortgage, we can help. Take a look around our site today, or get in touch to find out more.
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Written by: Andrew Page