Life is a random thing, and despite our best efforts, we cannot always predict every twist and turn. This speaks true to the property market and more namely, timing; we cannot always predict the timing of our new job in relation to the ups and downs property market.
When you’ve landed your dream job – with a fat new salary – and market conditions are right, you’re likely to be itching to ‘seal the deal’ by diving headfirst into a property investment; but is it possible? Getting home loan approval can be tough at the best of times, so read on to find out just what impact having a new job (or being on your probation period at work) can have on your mortgage application.
Does having a new job – or being on probation at work – affect my ability to be approved for a mortgage?
Having a new job could impact your mortgage application, but it greatly depends on your industry, previous work history, as well as other background information that would usually be taken into consideration, such as outstanding debt, etc.
When assessing your mortgage application, mortgage lenders will be most concerned with the risk you pose – this means that having just started a new job (or being on your probation period at work) could raise a ‘red flag’. From a mortgage lender’s perspective, if you are in a new job or on your probation period (where you can be let go at any time) you are a risky applicant. The fact is, people land and then shortly leave new jobs all the time. It doesn’t matter how enthusiastic or excited they might be initially, sometimes jobs just aren’t the right fit and people leave. Mortgage lenders recognise this.
But luckily, it’s not all doom-and-gloom. There is still the chance that you might be able to find a lender to support your application. If you are strong applicant otherwise, chances are you will still be easily able to find a lender. Likewise, if you have simply moved to a new job in an industry you have been part of for many years, it is also likely you will find application success. Mortgage lenders are most concerned with risk, so if you can show that you are stable, you are headed in the right direction.
On the other hand – job aside – if your application is ‘mediocre’ at best, and you have just thrown a brand-new job on top of that, you might find it a bit harder to find a lender – but there is still a chance! Although it might take a little more looking, unless your application had no chance of being approved regardless of the new job, it’s likely someone will approve your application. The thing is, if it takes that much shopping around, it might not be the home loan deal you want. If this is the case, you might find you’re better off waiting until you’ve been at the same job a little longer.
If I get approved for a home loan while at a new job, will I pay a higher interest rate than usual?
Fortunately, it does not usually work like this. If the lender deems you to be a suitable applicant, in most cases the fact that you have just started a new job will not negatively influence your interest rate. However, if you are concerned, ask! The best way to find out is to ask lenders because everyone’s circumstances will be different.
How much can I borrow on my home loan if I have a new job or am on probation?
Each loan will be assessed on a case-by-case basis, with approvability being based on the particular lender, as well as the individual circumstances of the applicant.
If you have managed to be approved, you likely have enough going for you to make you look ‘stable’ and not high risk, meaning you should be able to secure the same loan amount as anyone else – perhaps even up to 90% LVR or over 100% if you have a guarantor.
Will my line of work have an impact?
As you would expect, your line of work will most likely have an impact on your application. If you have just started a new job – or you are on probation – you have already raised ‘red flags’. However, if you have been in that particular industry a while, it is a stable profession, and you are on a regular salary, you’re likely to find home loan approval success.
Jobs that are in high demand are usually preferred by lenders, such as nurses, teachers, mining professionals, etc.
On the other hand, if you do casual or freelance work, or you are involved in a more unstable industry where you are not being paid a regular salary, it is more unlikely that a lender will approve your application.
If I am planning on changing job, is it better to apply for a mortgage first?
While it might be safer from a lender’s perspective to approve the home loan application of a person who has been in a job for a lengthy period of time, if you are a professional who is simply moving to a new job in the same industry, it is likely that a lender will still positively consider your mortgage application.
If you have moved to an entirely new profession – and there is no clear link career progression wise – in most cases lenders will be more apprehensive towards your home loan application.
Words by Kathryn Lee