Will Changing Jobs Affect Our Mortgage Application?



While changing jobs hardly any of us give due consideration to how changing jobs can affect on buying a home. Although a large majority may remain unaffected by changing jobs in this respect, some will feel the pinch as their home loan applications may not qualify due to changing jobs.

Amongst salaried employees, if you do not earn additional pay from overtime, bonuses or commissions, changing jobs will not prove too much of an issue especially if you stick to the same line of job. In fact, if you are earning a higher salary than your previous one, it will improve your chances of a successful home loan application. Similarly, if you earn your wages on an hourly basis for a straight forty hours a week without any overtime, then also you stand a good chance of qualifying for the house mortgage.

However, commissioned and part time employees should give careful consideration to their situation before changing employment because mortgage lenders are a bit wary of extending loans in such a scenario. This is because, if you are a commissioned employee, your income depends largely on the commissions earned and mortgage lenders tend to take into account your average commission in the last two years.

When you are changing jobs, there is an uncertainty about your future commissions even if you are in the same line of work and have the same commission structure. The negative impact stands true for part-time employees also since there is no saying how many hours you will be able to work each week on the new job and therefore, the average income becomes almost impossible to calculate.

Employees whose income is derived largely from bonuses should also not be in a haste to change jobs if they wish to secure home mortgage loans. This is because future bonuses are hardly ever considered by mortgage lenders unless those bonuses have been received from the same job over the past two years. If you earn your income from working over time, your qualifications for loan applications become poor if you change jobs since your future earnings are uncertain. They may or not be at par with your current income since all employers have their own methods of paying for overtime.

You also negatively impact your chances for a home loan if you are switching over to self-employment because lenders want to see a 2-year track record for self-employment earnings before approving a home loan. If already self-employed and considering switching your business from sole proprietorship to partnership, you should delay it if you wish to secure a home loan.

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