The process of shopping for a mortgage can be daunting, especially if you are also considering changing jobs. There are several things to consider when changing jobs, including the impact on your mortgage application.

Things to Consider When Changing Jobs Before Buying a House

Here are five things to consider when changing jobs before buying a house:

1. Job Stability

One of the first things that lenders will consider when reviewing your mortgage application is your job stability. Lenders want to see that you have a steady income and a good employment history. If you are changing jobs, this could impact your ability to get approved for a loan. It is important to consider your job stability when changing jobs, as well as the stability of the company you are considering working for. Lenders may be more willing to approve your loan if you are changing jobs to a company that is more stable or has a better employment history.

2. Income

Your income is one of the most important factors that lenders consider when reviewing your mortgage application. If you are changing jobs, your income may change as well. This could impact your ability to get approved for a loan, as well as the interest rate and terms you are offered. It is important to consider your income when changing jobs, as well as the income of the company you are considering working for. Lenders may be more willing to approve your loan if you are changing jobs to a company that offers a higher income.

3. Credit Score

Your credit score is another important factor that lenders consider when reviewing your mortgage application. If you are changing jobs, your credit score may change as well. This could impact your ability to get approved for a loan, as well as the interest rate and terms you are offered. It is important to consider your credit score when changing jobs, as well as the credit score of the company you are considering working for. Lenders may be more willing to approve your loan if you are changing jobs to a company that offers a better credit score.

4. Debt-to-Income Ratio

Your debt-to-income ratio is one of the most important factors lenders consider when approving a loan. This ratio is a comparison of your monthly debt payments to your monthly income. For example, if your monthly debt payments are $2000 and your monthly income is $4000, your debt-to-income ratio would be 50%.

Generally, lenders like to see a debt-to-income ratio of 43% or less. If your debt-to-income ratio is higher than 43%, you may still be approved for a loan, but you may have to pay a higher interest rate. If you are changing jobs, your new job may come with a higher salary, which can lower your debt-to-income ratio.

Conversely, if you are changing jobs and your new job pays less, your debt-to-income ratio may increase, making it more difficult to qualify for a loan.

5. Length of Employment 

Lenders also like to see a steady employment history when considering a loan application. If you have been at your current job for several years, this is viewed favourably. However, if you are changing jobs, this may be viewed as a negative. If you are changing jobs, be prepared to explain the reasons for the change to your lender. You will also need to provide documentation, such as a letter from your new employer, detailing your new position and salary.

Conclusion

The main takeaway from this guide is that changing jobs while mortgage shopping can have impacts on both the mortgage process and the interest rates that you qualify for. While changing jobs may not seem like a big deal, it is important to be aware of the potential impacts so that you can plan accordingly.

If you are thinking about changing jobs while mortgage shopping, the best thing to do is to speak with a mortgage lender to get a better understanding of how it may affect your application. In some cases, it may be beneficial to wait until after you have closed on your mortgage to make any changes to your employment situation.
When you’re ready to purchase your first mortgage application in Ontario, Mills Financial Group can help you. We can provide you with a loan solution that is perfect for your needs. Get in touch with our team today to know more!