Should You Change Jobs Before Buying a House?
January 19, 2022 | Posted by: Ron Chan
The Bank of Canada recently completed their year-ending Canadian Survey of Consumer Expectations and reported on a very interesting finding:
'The likelihood that workers will switch jobs has reached a record-high level - a sign of confidence in the labour market. The increased probability of workers leaving their job may also reflect the release of pent-up demand for a job change by some workers who decided to stay in their current job earlier in the pandemic. Workers may also be more interested in changing jobs now because a tighter labour market offers more opportunities.' (Bank of Canada, Jan 17, 2022)
This renewed confidence is a breath of fresh air, and if you're considering a change of jobs you've got a lot to be excited about for the year ahead. However, where you may not be confident, is with respect to getting a home loan given your plans to transition to a new company, or even career altogether. Should you wait until your mortgage is secured, or move forward with your professional life? Below are a few key things to consider.
What to Consider When You Want to Change Jobs Before Getting a Mortgage
Will Your New Job Pay More (on paper)?
Lenders like hard facts. If you're leaving one job and secure another with a higher consistent income then you're in a good position to get the home loan (all else equal). Please note that this applies to consistent wages and salaries. A new job that offers lower wages/salaries but has a commission/bonus structure that presents the opportunity to earn significantly more at the end of the year is not a proven source of income to lenders. Until you've established a pattern of consistent commission earnings the 'opportunity' to have a greater income will meaning little or nothing to them.
Do You Have a Pattern of Job Changes?
If you've changed jobs every year, even every two years in the last decade, lenders may question your stability as an investment. A job change after putting in a solid tenure is perfectly fine, but if you have a pattern of jumping from one company to the next, you will appear suspect to the big banks.
Does the New Job Exhibit an Upward Trajectory in Your Career?
Like with transitioning into a higher paying job, a vertical career move is always good in the eyes of lenders. If moving from general staff into lower management, lower management into middle management, or middle management into Board of Director status you're on the right path to getting a mortgage with favorable terms.
Speak to a Mortgage Broker
A mortgage broker will look at the big picture and analyze your entire financial situation. Only then can you confidently move forward with getting a home loan after a job change. They will assess your credit history, past income, new income, investments and other assets, and liabilities. They will determine if you qualify for a number of first-time home buyer programs which can reduce your required downpayment - something that offers peace of mind for those about to transition into a new job. From there your broker will determine how to best approach lenders. Better yet, they will have alternative home financing options available if you hit a stumbling block with the big banks. Simply put, a mortgage broker is at your side to ensure lenders gain confidence in you as an investment. Soon you'll be able to boast about getting a new job and a new home in the very same year. Exciting!
If you live in the greater Winnipeg area, get pre-approved on a mortgage with Ron Chan today.