A new job, a pay rise or a move into self-employment can change more than your working week. It can also affect how a bank assesses your income and whether your mortgage still fits your budget.
An income change does not automatically put your property plans on hold. The key is understanding what it means before you apply for lending or commit to your next move. Here are the questions I would work through with you.
Why Does The Type Of Income You Earn Matter?
Banks look at how much you earn, how regularly it arrives and how likely it is to continue. A steady salary can be easier to assess than income that changes each month.
For example, you might move from a salary to a contracting role and expect to earn more overall. However, the bank may need evidence of those earnings before including them in its calculations. Your earning potential and the income a lender can currently rely on may be different.
Can You Get A Mortgage After Starting A New Job?
Starting a new job does not automatically rule out a mortgage. A lender may look at your employment agreement, whether the role is permanent, any trial or probation period, and your work history.
Moving into a similar role in the same industry may be assessed differently from starting a new career with variable hours. If you are buying, refinancing or applying for extra lending, I can help you understand what information the lender may need and how the timing could affect your plans.
How Do Banks Assess Self-Employed Or Variable Income?
If you work for yourself, a lender may ask for financial accounts, tax records and business bank statements. The aim is to understand the income available to support your mortgage after business costs.
Bonuses, overtime and commission may also need a track record. A bank might average those earnings or include only part of them, rather than assume your best month will happen every month.
As we explored in the previous newsletter, banks can assess the same situation differently. That makes it useful to check your options before assuming one lender’s answer applies everywhere.
What If Your Income Drops And You Already Have A Mortgage?
Your agreed repayments still need to be made, so start by checking whether your new household income covers the mortgage alongside rates, insurance, food and other bills. Think about whether the reduction is temporary or likely to last.
If you are worried about keeping up, it’s always best to speak with your lender early. I can help you prepare for that conversation and explore possible changes. Any assistance depends on your circumstances and lender approval, and lower repayments now can sometimes mean paying more interest over time.
Could A Pay Rise Or Irregular Income Change Your Mortgage Structure?
A pay rise could give you room to build savings or repay your mortgage faster. Before increasing repayments or making a lump-sum payment, check your loan’s limits and any charges.
If your income fluctuates, keeping money aside for quieter months may be more useful than committing every extra dollar to repayments. A flexible loan portion might help in some situations, but its interest rate, fees and conditions also matter. The right balance depends on your wider budget and goals.
When Should You Talk To A Mortgage Adviser?
The best time to talk with your Mortgage Adviser is before you change jobs, reduce your hours or move into contracting or self-employment, particularly if you are also planning to buy a property, refinance or borrow for renovations.
If you already have pre-approval or an application underway, tell your Adviser and lender about any planned or actual changes so your position can be checked again.
If your income has changed, or a change is on the horizon, feel free to get in touch. I can help you understand how lenders may view your situation and whether your mortgage still suits the way you live and earn.