September 21, 2017
If you move into a new job, or even a new, higher paying position with the same organisation, will you be able to refinance and get a better deal on your loan? While your income level is a major factor in determining if you are eligible for the most competitive loan products on the market, there are many other factors that play a significant role as well.
Also, what you may not realise is that many lenders may not offer you a great loan because both your consistency of employment and your recent income, will also be factored into your loan eligibility. The fact that you just changed jobs could be a red flag to some banks.
The blue chip borrowers are those who have a stable employment with a steady or rising income. This makes it easier for banks to assess how much you’ll be able to afford now – and twenty years from now. If you have a history of moving from one job to another every year or two, some lenders may deny your application or at least will require other qualifiers such as excellent credit and strong savings habits to feel secure you are someone who is responsible enough to handle a mortgage.
Aside from income, lenders will consider how often you change jobs, as well as if you have or are considering a brand new career direction. While making a career overhaul may be exciting to you, it doesn’t excite banks. They want to see a built up a track record for success in whatever industry you are currently working in.
If you can hold off on refinancing, you may have a better chance of securing a competitive loan. Ideally, lenders want to see you’ve been in your current position for at least 6 to 12 months. You’ll be eligible for better loan products if you’ve been working for the same organisation for over a year.
What if you want to refinance now for other reasons? You do have some options. First, you may be able to refinance even if you’ve only been in your new job for a few months if you have a large down payment or have built up a lot of equity in your home. On the other hand, don’t expect to borrow more than 80% of the loan to value ratio without a solid income and employment history.
There are lenders out there who have more flexible lending policies. Talk to a mortgage broker or specialist about working with specialised lenders who will be willing to look at alternative factors such as other sources of income like investments or royalties, and a proven ability to earn a high income within your industry.
Shop around and explore your options. Take an honest look at your finances, lifestyle habits and borrowing power. Getting a new job shouldn’t hold you back – it’s something to be proud of. As long as you do your research and are smart about choosing your new loan and when to apply for it, your career and your new mortgage can open even more doors for your financial future.
Written by Refinancing.com.au
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