When you’re looking to buy a home, one of the main things lenders will be looking for is stable income for the future. While starting a new job is often a very exciting time, it can also bring with it stress surrounding how you’ll qualify for a mortgage with a source of income that’s so new and could potentially be seen as unstable. The reality of the situation is that you may not have any cause for concern as the process of applying for a mortgage after starting a new job isn’t as complex or stressful as you may think.
Credit Score And History Matter More Than Job History
Regardless of your new job and how long you’ve had it, your credit score and history will always matter most in the grand scheme of things. If you’re already in good shape when it comes to your finances, then starting a new job will likely have no impact on your ability to secure a mortgage.
What Type Of Job Change Did You Make?
It’s important to know that not all job changes are seen as equal. If your new job is with a company you’ve been working with for at least 2 years (the magic number for lenders), the change of job title may actually be seen as a good sign of stability, regardless of whether it was a lateral or vertical promotion.
If your new job has you exploring a career change, lenders are likely going to look a little closer to see what industry you’ve shifted into, if it’s a related field and how risky of a move it may be. The more related and relevant your job change is, the less likely it will affect your ability to qualify for a mortgage so keep this in mind when considering new opportunities.
Type Of Income
If your job change brings with it an increased income, lenders will see that as an advantage. Even if you wind up changing jobs again in a few years, they’ll give you the benefit of the doubt and assume you’ve banked enough savings to cover any mortgage payments while you search for something new.
If your job change has you earning commission or bonuses in order to reach a certain guaranteed income level, lenders will be wary of giving you money as a high commission-to-salary ratio is a greater risk to them. If this is the case for your job but you perform well within this structure, it’s advisable to wait 6 months before approaching any lenders so you can show them how stable your income is and start saving for a down payment in the meantime.
If your new job has you earning a healthy salary with the additional potential for commissions and bonuses, you’ll actually have a leg up over other applicants who may just have a regular salary as income.
Length Of Tenure In Your Job History
Lenders want to know if you’re prone to job hopping, or if you have a tendency to stay put for long periods of time. If your job history shows that you’re likely to stay with a company for 2 – 5 years or more, it exhibits that you’re not impulsive or flighty, characteristics that can lead to troubling money-related decisions down the road. It’s also important to note that not all job changes are a result of being fired or demoted, sometimes the reason you left your previous job can give you a leg up with lenders as well. If you left on your own volition and on good terms, you will definitely have an advantage compared to those who exhibited a pattern of terminations or layoffs.
Finding The Right Mortgage Broker
Having a professional mortgage broker on your side will help you navigate this process a lot more smoothly. When you secure the services of a reputable broker, you’re showing the financial institutions that you’re a smart, responsible borrower who is choosing to approach this situation strategically. In addition to this being proof of another positive characteristic, using the services of a broker will also get you access to un-advertised rates and give you an advantage in today’s wildly competitive marketplace.
Having An Offer Letter
If you’ve just accepted a new position, it’s advisable to speak with your new employer about obtaining an offer letter. This letter outlines your job duties, starting date and initial compensation, all things that lenders will want to know. Having an offer letter will give you the ability to show lenders that your job is setting you up with a stable and steady income.
Whether you’re new to Canada or just looking to make a career change, starting a new job doesn’t have to be a burden on your mortgage application process. Do your due diligence in advance to understand what is required from you, and how you can stack the cards in your favour, and you’ll be able to navigate the process smoothly and efficiently.