How To Secure A Mortgage After Landing A New Job
When planning to purchase your first home, lenders focus on one crucial factor: your future income stability. Landing a new job comes with lots of excitement, but it can also ignite worries about qualifying for a mortgage with a relatively fresh and possibly uncertain source of income. However, don’t panic since the process of acquiring a mortgage after getting a new job is less stressful than many people perceive it.
Your Job History Doesn’t Matter, Credit Score And History Does
No matter your recent job switch or how long you’ve been in that job, your credit score and history will be the most important factors during the overall assessment. If you already possess a solid financial standing, your new job may not play a role in determining your mortgage eligibility.
What Type of Job Shift Did You Make?
It is essential to keep in mind that not all job shifts carry the same weight. If your job change is with an employer you’ve been working for at least two years – the benchmark for lenders – the change can actually signal stability without considering whether the promotion was vertical or horizontal.
When switching careers, lenders will assess the industry you’re shifting to, its risk and its relevance. The closer it is to your previous job, the less impact it’ll have on your mortgage approval. Consider this when looking for new opportunities.
Income Type
Lenders view it positively when your job shift results in a higher income. Even if you switch jobs again in a few years, they’ll likely assume you’ve saved enough to cover mortgage payments during your job search.
Suppose your job change involves earning commissions or bonuses to meet a guaranteed income level. In that case, lenders may hesitate to lend, considering a high commission-to-salary ratio risky. If this applies to your job but you excel within this structure, it’s wise to wait six months before approaching lenders. This gives you time to demonstrate income stability and save for a down payment.
If your new job offers a solid salary along with the possibility of commissions and bonuses, you’ll stand out among other applicants who rely solely on a regular salary.
Job History Duration
Lenders assess whether you tend to switch jobs frequently or remain in one position for extended periods. A consistent job history spanning 2 to 5 years or more demonstrates stability and reliability, qualities that bode well for future financial decisions. It’s worth mentioning that not all job changes stem from adverse circumstances like termination or demotion. Departing on good terms voluntarily can work in your favor with lenders, offering an advantage over those with a history of layoffs or terminations.
Finding The Ideal Mortgage Broker
Walking with a skilled mortgage broker by your side will significantly streamline the process. Engaging a reputable broker clearly indicates to financial institutions that you’re a knowledgeable, responsible borrower approaching the situation strategically. Beyond showcasing another positive trait, utilizing a broker grants access to unpublished rates and offers a competitive edge in today’s fiercely contested market.
Possessing An Offer Letter
If you’ve just accepted a new position, take the initiative to request an offer letter from your new employer. This letter, outlining your job duties, start date, and initial compensation, provides vital information that lenders will want to see. Having an offer letter empowers you to demonstrate to lenders that your job offers a stable and steady income.
Final Word
If you’re new to Canada or contemplating a career change, starting a new job shouldn’t burden your mortgage application process. Take proactive steps to understand the requirements and how to enhance your position, ensuring a smooth and efficient process navigation.