Banks will thoroughly examine your creditworthiness before granting you a mortgage. If you have permanent employment and sufficiently high earnings, you have a good chance of financing.
However, not only the type of contract is important, but also the seniority of the current employer, because he indicates the stability of employment. In this context, a mortgage and a change of job just before or during the application seems like a bad idea.
Employment period and mortgage – what is important for banks?
When you decide on a mortgage, you incur a commitment for many years, which in addition is associated with a heavy burden on your home budget in the form of high monthly installments. It is therefore not surprising that the bank will want to make sure that you have the ability to pay off such sums regularly before providing financing.
For the bank, the most important determinant of your creditworthiness is the amount of your income and the certainty that you will receive it during the term of the loan agreement. The last one can be proved by the form and period of employment.
Therefore, the employment contracts for the indefinite period are the most valued by banks, which lasts long enough before applying for a loan – this suggests that you have an established position in the workplace and you can count on stable employment.
Persons employed on the basis of other types of contracts have a chance to get a mortgage, however, in this case, the banks pay attention to the date of their conclusion and duration.
Below are the minimum employment periods that banks require when applying for a loan.
Unfortunately, banks do not include contracts for a trial period, and some institutions also do not accept civil law contracts such as mandate or work contracts, which are usually concluded for short periods and do not ensure stable employment.
When examining your creditworthiness, the Bank will take into account not only employment and income but also such matters as Your constant financial burden (costs of living, other credit obligations, etc.), previous credit history, amount and type of own contribution, number of persons on the farm home age, even marital status.
How can a change of job affect your credit decision?
If you decide to change jobs just before or during the loan application, you have to face some complications. We have already mentioned in the previous paragraph that before making a credit decision, the bank will take into account the employment certificate you provided, which should include average earnings from the last quarter.
It is not difficult to guess that with a new employment contract the statement in the salary statement for the last 3 months will not be filled, and this will automatically affect your creditworthiness.
It is also worth remembering that the bank will reject the loan application if you are in the current workplace during the notice period, even if you intend to start working for a new employer afterward.
Changing jobs while applying for a loan may also be a mistake, because the need to provide additional documents from a new employer may extend the entire financing process.
Change of job before applying for a mortgage
Considering the issues described above, it can be concluded that a mortgage and a change of job before submitting the application should not always go hand in hand. It all depends on when exactly the employer will change, because too short a period of employment shown on the employer’s certificate may be the reason for refusing to fund.
If you want to avoid problems, wait with applying for a loan until your employment period in the new workplace is long enough for it to be positively assessed by the bank. In the case of an employment contract of indefinite duration, you must wait a minimum of 3 months.
It is worth looking at one more situation when the procedure of applying for a loan is underway and the change of job takes place after submission of all documents. Many people wonder whether it makes sense at this stage to inform the bank about a change of employer.
Unfortunately, concealing this information may have unpleasant consequences (even criminal liability), but its disclosure also has consequences. Providing another certificate from a new employer may cause that the entire procedure of examining the application will start again, thus extending the waiting period for the decision and the money.