The mortgage approval process: how long does it take, and what do I need?
We cover all kinds of topics on the CLS Money website and hopefully answer all your questions about mortgages and buying property.
One of the questions we answer regularly comes from hopeful buyers who have just landed a new job.
“How long do you have to have been working to get a mortgage?”
There’s a lot of excitement attached to securing a first job or a new position. It’s great to move up the working ladder with fresh hopes of what our improved lifestyle could bring. However, with that new opportunity, our customers often find themselves with a higher salary and the hope that it will open new doors to possibilities previously out of reach.
New job – new opportunities
Standard mortgage calculations work on a figure of 4 x the borrower's salary. A higher income can improve borrowing potential and the possibility of moving to a bigger or better property or a more advantageous location. For many, it’s the step they need to finally get on the property ladder and take those all-important steps to own their own home.
Sadly, life isn’t always so straightforward. Lenders love security and are well-versed in where the risks are. Those who have worked the same position for 10 or 15 years present a far safer option than someone starting a brand new job. However, with every new job there comes risk: will you be a good fit? Will you like the job? Can you cope with its demands and challenges?
Asking those questions, lenders would prefer concrete ‘yes’ answers, but in a world where we change our jobs more regularly than we used to, the rules around mortgages have had to adjust to cater for this.
Today, we’re going to look into ‘how long do you need to be in a job to get a mortgage’ in a selection of different cases. We’ve covered these topics in more depth on their own pages and will provide links for those looking to explore them in more detail.
Mortgage approval and lender criteria
First, let’s say every mortgage comes with stipulations. For a lender to consider you a reasonable risk worthy of the loan, you must pass their tests. You need to earn enough money to make your repayments, show that you can manage money sensibly, and your typical monthly outgoings aren’t going to hinder your ability to pay back what you owe—even in the face of an emergency or unseen financial event.
To do that, you must pass their affordability assessment, exploring your income against your outgoings and ensuring you can afford an acceptable lifestyle while buying your home.
Second, you need to have an acceptable credit score. Your credit report and history show how you’ve handled finance, how much debt you currently carry, and if you’ve ever got into trouble borrowing more than you could manage.
There are a few other facts and figures to cover but they’re the main contenders. With a new job, business, or role in place, lenders need to be sure that the money they’re providing is in safe hands.
First-time buyer in a new job
A first-time buyer with no history of making regular mortgage payments can be viewed as something of an unknown quantity. Even with a new and attractive job contract in place, many lenders will want to see at least 6 months of continued employment in the role or that you’ve at least completed your probationary period.
First-time buyers might not have had the opportunity to build a suitable credit history. Perhaps they’re fresh out of college or have been working less secure or part-time positions while they wait for a significant opportunity.
For further information, read our page about getting a mortgage as a first-time buyer in a new job.
However, the good news is that specialist lenders are willing to work closely with you to understand precisely where you stand. Where mainstream lenders’ algorithms will reject anyone with less than 6 months in a new job, our lenders are far more understanding.
Remortgaging in a new job
You’ve already proved you can pay a mortgage; you’ve been doing it for a while now. The great news is that you’ve landed a better job and are about to have some extra money left each month to throw into the pot.
However, just like any new job, lenders expect to see you complete your probationary period to ensure you’re still a safe bet. For many, those 6 to 8 months might provide an excellent opportunity to get your home-moving ducks in a row or to spend a little more time scouring the market. Yet, for those already anticipating the move, you want to strike while the iron’s hot.
To a lender, a probationary period doesn’t guarantee that the income is finalised. Many will expect to see borrowers working with a stable income for 6 months, yet sometimes with as many as 3 years.
Once again, the good news is that there are specialist lenders who don’t work to simple yes and no checklists but take the time to understand each unique position. So if you can show them what they need to feel comfortable lending you the money, it’s a win-win for both parties.
Read more about remortgaging in a new job on our dedicated page.
Taking out a buy-to-let mortgage in a new job
You’ve landed a new job; you’ve got money left over each month and some savings in the bank; this is the ideal time to invest in property.
Buy-to-let mortgages are—like residential mortgages—reasonably straightforward, with all the necessary paperwork and factors in place.
So, how long in the job to get a mortgage? As with all mortgages, you’ll have to face the affordability assessments and credit checks, but in a new job, it’s highly likely that the mainstream banks and lenders won’t consider your application without a minimum of 6 months (and again, possibly up to 3 years) of payslips to prove your earning stability.
Where you haven’t quite banked the necessary time in a new job to ensure that extra level of security, specialist lenders are willing to work with you as a landlord.
There’s more information about becoming a landlord with a new job on our page dedicated to the subject.
First-time buyers on zero-hours contracts
With job roles and opportunities looking quite different in today’s society, many workers earn a respectable living without a formal agreement or set hours as part of their contract. For some, this flexibility delivers the freedom to pursue other work or leisure opportunities; for others, it’s the only option available to work in their chosen field.
Again, mainstream lenders will rarely consider something so changeable and seemingly inconsistent. However, a specialist lender will review your work history, previous payslips, and current role to make an informed decision on the risk you represent.
Landing a mortgage on a zero-hours contract isn’t as straightforward as having a regular full-time job, especially in a newly landed position, but zero-hours contracts are becoming more accepted among lenders, so there’s almost always an option in the right hands.
Even though working for yourself is more popular than ever, lenders still consider it an unstable income option unless you have the figures to show otherwise. Okay, back to the big question: how long do I need to have worked to get a mortgage as a self-employed person?
Sadly, most lenders expect a minimum of 3 years of accounts and tax reports without a regular payslip before considering approving a mortgage application.
Unlike the mainstream banks and lenders, specialist mortgage providers may overlook the lengthy probation term if you can show contracts and work approval that provides a healthy income, enough to cover your expenses and the money you need to borrow.
These lenders aren’t generally available to the mass market, so tracking them down will mean engaging with an experienced mortgage broker. Are you going self-employed? Read more about your mortgage rights on our dedicated page.
Company director mortgages
There are two trains of thought when it comes to landing a mortgage as a company director: the first, that it’s easy, as they’re the ones earning big money; the second, that running a business involves a great deal of risk, and mortgages are difficult to attain.
We’re here to tell you that plenty of mortgage products are available for company directors, although, again, if you’re new to the role, there are a few extra hoops to jump through to prove your income is stable enough to reassure your lenders. High-street lenders expect to see at least a year’s trading figures and precautions in place for when times may be a little lean.
However, a specialist lender may accept the paperwork and projections you provide as assurance enough to approve a loan.
As you’ve seen, getting a new job, however exciting it seems, doesn’t necessarily open the doors you expect it to—well, not straight away, anyway.
So, how long do you need to work to get a mortgage? It doesn’t have to be as long as you think.
If you want to get the ball rolling without waiting for a lengthy or untimely probation period to complete, CLS can help you track down a mortgage provider willing to work with you and land the mortgage you need.
CLS Money is a highly experienced mortgage broker that works with all types of specialist lenders. Whatever situation you find yourself in, we can help you find the mortgage you need. So give us a call today to discuss all of your options.